Men Bet She Would Fail; Now She Runs a $26 Billion Fund

“The floor was definitely not a place for people who were cute, prim and proper,” Dawn Fitzpatrick said in a recent interview. She is the new chief investment officer of Soros Fund Management. Credit An Rong Xu for The New York Times

From the moment Dawn Fitzpatrick stepped onto the American Stock Exchange trading floor as a clerk in 1992, she sensed that the odds were against her. Surrounded by men in jackets barking trade orders, she stood out in her pleated skirt and twin sweater set. Traders around her began wagering over how long Ms. Fitzpatrick, then 22, would last.

“The floor was definitely not a place for people who were cute, prim and proper,” Ms. Fitzpatrick said in a recent interview.

Those who bet against her lost.

Ms. Fitzpatrick began her career at O’Connor & Associates, the Chicago firm that was later acquired by UBS as the Swiss bank’s internal hedge fund. She rose to lead the firm and become one of Wall Street’s most powerful women. Now, largely unknown outside the industry, Ms. Fitzpatrick faces her biggest and most public challenge yet: working for George Soros, the estimable octogenarian investor and philanthropist.

Mr. Soros himself is perhaps the finance world’s most famous investor. In 1992, he made a $1 billion bet against the British pound. The trade came to be known as one that “broke the Bank of England” when Mr. Soros’s heavy selling of the country’s currency helped prompt the government to devalue the pound.

But since Mr. Druckenmiller left the firm in 2000, Soros Fund Management has churned through eight chief investment officers. It’s a remarkable turnover for the top of any company, even among hedge funds, which are known for a cutthroat culture. It’s even less typical in the sleepy world of family offices, where employees manage the assets of a single clan, which is how the Soros funds are now structured after years of accepting outside investor money.

And Soros is not just another family office designed to maximize wealth. There is a direct link between the money that is made at Soros and its founder’s philanthropic endeavors. Mr. Soros, now 86, is an outspoken supporter of Democrats including Hillary Clinton, and travels the world seeking to promote democracy. The $1 billion that Mr. Soros made betting against the British pound, for example, helped to support scientists in Russia after the fall of the Soviet Union.


The trading floor of the American Stock Exchange in 1992, when Ms. Fitzpatrick landed a job with O’Connor & Associates as a clerk. Credit Alan M. Rosenberg/AMRPhoto

Though Ms. Fitzpatrick is registered as a Republican, she appears unfazed that her investing acumen will in turn support Mr. Soros’s activism. “If we do a good job in terms of generating returns, the impact the money created can have is tremendous, and that’s really motivating,” she said.

Yet Ms. Fitzpatrick, 47, takes over at Soros at a moment of global uncertainty. Impending elections in France and Germany threaten to upset the status quo across Europe. The United States is only beginning to absorb the implications of Donald J. Trump’s young presidency. Markets around the world are holding steady but seem liable to drop on any given day.

Ms. Fitzpatrick is bullish. She believes stocks in the United States, having hit record highs, can rise higher still. But she attributes this optimism to what she says are fundamentally healthy companies, not investor giddiness over the Trump presidency. “In reality, if we had Hillary Clinton as our president, I think we’d be here or higher,” Ms. Fitzpatrick said.

Buying Up the Board

At the height of the financial crisis of a decade or so ago, Ms. Fitzpatrick faced the biggest decision of her career. She had risen to become chief investment officer at O’Connor, then a unit of UBS, and now had to steer the firm through a period of market upheavals that would leave some of the biggest names on Wall Street bankrupt.

In the summer of 2008, Ms. Fitzpatrick received a call from Richard S. Fuld, then the chief executive of Lehman Brothers. Mr. Fuld acknowledged that Lehman’s stock was tumbling, but he told Ms. Fitzpatrick it would recover and asked her not to pull the billions of dollars that O’Connor had with the bank’s prime brokerage, a division that lends stock and cash to hedge-fund clients for trading, in exchange for housing some of the funds’ capital.

Ms. Fitzpatrick had a quandary. If she maintained her balance and Lehman managed to survive, she would keep a relationship with a critical Wall Street partner. But if she kept her balance and Lehman went bankrupt, she would lose billions of dollars for UBS O’Connor’s clients.

“She did something no one else did,” recalled Michael Meyer, a former UBS O’Connor employee who was there at the time. “She quickly assessed the situation with him and said: ‘Dick, your stock is trading at $22. If the stock goes to $15, I’m taking half out, and if the stock reaches $10, I’m taking it all out,’” Mr. Meyer recalled.

Ultimately, of course, Lehman failed, triggering some of the worst convulsions of the financial crisis and costing many investors billions. Ms. Fitzpatrick was able to avoid the worst of it, and saved the firm from getting trapped in years of bankruptcy proceedings. Other hedge funds that didn’t pull their money were stuck in losing market positions, unable to use their money to make new trades.

Though the episode left her shaken, it was the kind of quick thinking she had prepared for.

Born and raised in Irvington, N.Y., Ms. Fitzpatrick was the middle child among five siblings who grew up in a cul-de-sac on a street bustling with young families. She spent much of her childhood competing with taller, stronger brothers and sisters who excelled at sports like basketball. By her own description, Ms. Fitzpatrick was “short and scrawny.” Her father, she said, still jokes that she is the “runt of the litter.”

Eventually she found her stride. She turned to running, something she continues to do today, usually at 5 a.m. (She still holds the record for the 3,000 meter run at her high school.)

A neighbor, Marty Atlas, nurtured her early interest in the markets, showing a teenage Ms. Fitzpatrick how stock tables worked. Even as a girl, her investing prowess was evident. “I remember her playing Monopoly with all these other kids, and she ended up with all the hotels,” Mr. Atlas said.

Ms. Fitzpatrick quickly zeroed in on her goal for after college: Wall Street. “It was the one place where you could succeed beyond your wildest dreams,” she recalled. After graduating from the University of Pennsylvania’s Wharton School with a bachelor of science degree in 1992, Ms. Fitzpatrick landed a job with O’Connor & Associates as part of a junior group of American Stock Exchange clerks.

She moved on to trade options for O’Connor at the Chicago Board Options Exchange. There, groups of traders gathered in pits to buy and sell major trading contracts, yelling out their orders while gesticulating madly. Ms. Fitzpatrick, once again an outsider on a testosterone-heavy trading floor, mastered the jargon and the hand signals.

It was in Chicago that Ms. Fitzpatrick learned just how cruel markets could be. In December 1994, an economic crisis was looming in Mexico that resulted in a swift and drastic devaluation of the Mexican peso. Ms. Fitzpatrick was covering a pit where so-called locals — traders who made bets with their own money — were exposed on the wrong side when the American Depository Receipts of Mexican companies moved suddenly. They lost everything.

“Basically overnight, these guys who I would stand next to from 9:30 a.m. to 4 p.m. every day lost their homes, lost their marriages, just everything in a flash,” Ms. Fitzpatrick said. “It really left an indelible mark on me.”

In the course of her career, Ms. Fitzpatrick has tangled with regulators. While chief investment officer of O’Connor, Ms. Fitzpatrick oversaw the firm’s $5.3 million settlement with the Securities and Exchange Commission over charges that from 2009 to 2011 it had bought stocks in companies’ public offerings while also taking the opposite position, short-selling those same stocks. The bank denied wrongdoing. More than 23 firms were slapped with similar charges.

“Dawn would see possible risks, multiple layers, beyond anyone else in the room,” said Ross Margolies, the founder of Stelliam Investment Management, which Ms. Fitzpatrick and O’Connor seeded in 2007. “It was almost like she was playing a game of three-dimensional chess.”

‘Perceptions Matter’

In the world of finance, women can find themselves at a disadvantage, their careers stymied by overt sexism and implicit bias alike. The paucity of senior positions held by women in banks and other financial firms, which a recent Financial Times survey put at less than 26 percent, would seem to underscore that belief.

As the first female chief investment officer at Soros, Ms. Fitzpatrick becomes a woman with few peers; most everyone managing such a large pot of money on Wall Street is a man.

George Soros in 2014. Credit Joshua Bright for The New York Times

Ms. Fitzpatrick said that, on the whole, she has not felt discriminated against because of her gender in the workplace. At UBS, Ms. Fitzpatrick kept a pair of Christian Louboutin shoes under her desk but often walked around the office barefoot, a display of her confidence.

“Clearly, there are single moments in time when I would have rather been a 6-foot-3 blond-haired ex-football-playing guy,” she said. “But those tended to be offset by the times when I thought it was an advantage to be a woman.”

Ms. Fitzpatrick says women have innately useful qualities when it comes to money management. “One of the things I believe women have more of is humility in their investments,” she said. “We’ll cut losers quicker, in a more effective way, than generally men will.” Indeed, some studies suggest that women are more successful risk managers than men.

“From my perspective, perceptions matter, and it was important for me that I was there,” she said. “I didn’t want them to think I was anything but focused.”

Such hard-driving ambition can be a distraction, too. A few years later, in the summer of 2008, Ms. Fitzpatrick was so consumed by her work that she didn’t realize she was pregnant for several months. The financial crisis was beginning to unfold, and the markets were swinging violently. She was often sick to her stomach, and was also getting heavier, but she figured her discomfort was a result of her stress. Plenty of her peers were having visceral reactions to the crisis.

“The fall comes, and I’m nauseous, and I’m gaining weight, and it doesn’t even cross my mind that I could be pregnant,” Ms. Fitzpatrick said.

Today, Ms. Fitzpatrick maintains the long hours and relentless travel schedule common among financial executives. It keeps her away from her three children and her husband more than she would like.

But she lives in Irvington, the town where she grew up, and her two sisters and her parents still live nearby. They help with the children. She admits, however, that her relentless drive is “not necessarily a virtue for everyone.”

Keeping Up With Soros

In her new role, Ms. Fitzpatrick oversees assets that Soros Fund Management invests directly, as well as more than a handful of outside hedge fund managers and private equity firms. It is similar to the role Ms. Fitzpatrick played at UBS O’Connor several years ago. And during her last year at the Swiss bank, she held a more strategic role, managing teams across all of UBS’s asset management unit, and overseeing more than half a trillion dollars.

It was a prestigious job, but one that removed her from the day-to-day trading and market strategizing that associates say she loves most.

Now, “she will basically be able to sit down with those managers whom they’ve allocated money to, and really be able to speak the language,” said Rich Cunningham, a managing director at Barclays Investment Bank.

Among the new challenges she will face is all that turnover at Soros.

Ted Burdick, the previous chief investment officer there, stepped down after just eight months on the job, though he remains with the firm. Others who have held Ms. Fitzpatrick’s role have been caught up in the internal politics of the firm, and at times clashed with Mr. Soros himself.

Ms. Fitzpatrick may be at less risk because, unlike some previous chief investment officers, she will be reporting to the family office’s board of directors, rather than just Mr. Soros, who is the chairman of the board.

And yet Mr. Soros, one of history’s best traders, still can’t help but sometimes want to manage his own money.

Last year, as Britain prepared to vote on whether to exit the European Union, Mr. Soros stepped back into his day-to-day engagement, placing wagers that would be affected by the June referendum. The “Brexit” outcome, a surprise to many, triggered significant market swings, and Mr. Soros benefited from a position that predicted shares of Deutsche Bank would fall, among other trades.

Later in the year, however, Mr. Soros lost around $1 billion wagering that Mr. Trump would lose the presidential election.

Beyond his occasional trading, there could be a disconnect between Mr. Soros and his new chief investment officer. Speaking at the World Economic Forum in Davos, Switzerland, in January, Mr. Soros mixed his views on politics and finance to deliver a bleak economic prognosis.

Yes, investors were bullish, thanks to the belief that Mr. Trump would dismantle regulations and reduce taxes. But, he said, Mr. Trump would fail to achieve those policy goals. “I don’t think the markets are going to do very well,” Mr. Soros said.

Ms. Fitzpatrick, however, says that although she is more bullish on the stock market than her boss, they are not out of sync on the big picture. “As an investor,” she said, “you have to continuously evolve and learn.”


A Guide to Choosing the Right Small Business Loan

A Guide to Choosing the Right Small Business Loan

If you are in need of a business loan in 2017, finding the right lender and type of loan can be a confusing process. The first step is to answer several critical questions in order to help point you in the right direction:

  • How much money do you need?
  • What do you need the money for?
  • How quickly do you need the money?
  • How long will it take you to pay it back?
  • How long have you been in business?
  • What is the current financial shape of your business?
  • How much collateral, if any, do you have to put up for the loan?

Answering these questions will help determine if you should pursue a government-backed loan, a loan or line of credit through a bank, or a cash advance, line of credit or loan from an alternative lender.

If after answering these questions you know which type of lender is best for you, you can check our recommendations for various types of loans on our best picks page. If you’re not sure yet, keep reading.

  • The Small Business Administration (SBA) offers several loan programs designed to meet the financing needs of a wide range of business types.
  • With these loans, the government isn’t directly lending small businesses money. Instead, the SBA sets guidelines for loans made by its partners, which include banks, community development organizations and microlending institutions.
  • The SBA helps eliminate some of the risk to lenders by guaranteeing that the loans will be repaid.
  • Businesses have a variety of SBA loan types to choose from, each of which comes with its own parameters and stipulations on how the money can be used and when it must be repaid.

Pros and cons: The government guaranty, which typically covers between 75 and 90 percent of the loan, eliminates much of the risk for the lender. In addition, the terms of an SBA loan also tend be more favorable to borrowers. The downsides are that additional paperwork needs to be filed, extra fees need to be paid, and it takes longer to get an approval.

What the experts say: “The SBA provides a guaranty that enables the bank to extend credit it would have otherwise declined,” Javier Marin, director of business development for the Central Florida  Development Council and a former consultant with the Florida Small Business Development Center at the University of South Florida, told Business News Daily. “This is true for startups, companies with a tight cash-flow stream, and business owners with borderline, not bad, credit scores.”

To learn more about specific SBA loans, review the SBA loans portion of the Types of Loans section below.

  • While banks are often the sources of SBA loans, they also are lenders of conventional loans.
  • The biggest difference between SBA loans and non-SBA conventional loans is that the government isn’t guaranteeing that the bank will get its money back.
  • While a specific plan is still needed to get approval, bank loans don’t come with such stringent use terms that SBA loans do.

Pros and cons: The biggest pluses of conventional bank loans are that they carry low interest rates, and because a federal agency is not involved, the approval process can be a little faster. However, these types of loans typically include shorter repayment times than SBA loans and often include balloon payments. Additionally, it’s often difficult to get approved for a conventional bank loan.

What the experts say: “Even though approval rates have increased, big banks approve [only] slightly more than 20 percent of the loan requests they receive,” said Rohit Arora, CEO and co-founder of Biz2Credit. “Smaller banks approve a little less than half of the loan applications they receive.”

To learn more about specific conventional bank loans, review the conventional bank and alternative lender portion of the Types of Loans section below.

  • Alternative lenders are particularly attractive to small businesses that don’t have a stellar financial history because approval requirements aren’t as stringent.
  • Alternative lenders typically offer online applications, make decisions on approvals in a matter of hours and providing funding in less than five days.
  • There are direct alternative lenders, which lend money directly to small businesses, and lending marketplaces, which provide small businesses with multiple loan options from different direct lenders.
  • Examples of direct alternative lenders include Fundation, Kabbage and OnDeck Capital. Examples of lending marketing places are BizFi and Biz2Credit.

Pros and cons: The positives of working with an alternative lender are that your business doesn’t need to have a perfect financial status, there are few restrictions on what the money can be used for, and the loans can be approved almost instantly. The downside is that interest rates can be significantly higher than those charged by a bank.

What the experts say: “While a borrower is able to get money quickly, he or she pays a premium for that in the form of higher interest rates,” Arora said. “Alternative lenders are more willing to provide money to companies that might not have great credit ratings. The increased risk the lenders take is reflected in the interest rate charged.”

Currently, the SBA offers four types of small business loans:

  • 7(a) Loan Program: 7(a) loans, the SBA’s primary lending program, are the most basic, common and flexible type of loan. They can be used for a variety of purposes, including working capital, to purchase machinery, equipment, furniture and fixtures, the purchase of land and buildings, construction of new buildings, renovation of an existing building, to establish a new business or assist in the acquisition, operation or expansion of an existing business, and debt refinancing. These loans have a maximum amount of $5 million, and borrowers can apply through a participating lender. Loan maturity is up to 10 years for working capital and generally up to 25 years for fixed assets.
  • Microloan program: The SBA offers very small loans to new or growing small businesses. The loans can be used for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery or equipment, but can’t be used to pay existing debts or purchase real estate. The SBA makes funds available to specially designated intermediary lenders, which are nonprofit organizations with experience in lending and technical assistance. Those intermediaries then make loans up to $50,000, with the average loan being about $13,000. The loan repayment terms vary based on several factors, including the loan amount, planned use of funds, requirements determined by the intermediary lender and the needs of the small business borrower. The maximum repayment term allowed for an SBA microloan is six years.
  • Real estate and equipment loans: The CDC/504 Loan Program provides businesses with long-term fixed-rate financing for major assets, such as equipment and real estate. The loans are typically structured with the SBA providing 40 percent of the total project costs, a participating lender covering up to 50 percent and the borrower putting up the remaining 10 percent. Funds from a 504 loan can be used to purchase existing buildings, land or long-term machinery; to construct or renovate facilities; or to refinance debt in connection with an expansion of the business. These loans cannot be used for working capital or inventory. The maximum amount of a 504 loan is $5.5 million, and these loans are available with 10- or 20-year maturity terms.
  • Disaster loans: The SBA provides low-interest disaster loans to businesses of all sizes. SBA disaster loans can be used to repair or replace real estate, machinery and equipment, as well as inventory and business assets that were damaged or destroyed in a declared disaster. The SBA makes disaster loans of up to $2 million to qualified businesses.

Banks and alternative lenders offer some similar loans to those offered by the SBA, as well as funding options that the SBA doesn’t offer, including the following:

  • Working-capital loans: Working-capital loans are designed as short-term solutions for businesses in need of money to help run their operation. Working-capital loans are available from both banks and alternative lenders. The advantage of a working-capital loan is that it gives small businesses the ability to keep their operations running while they search for other ways to increase revenue. Some downsides of a working-capital loan are that they often come with higher interest rates and have short repayment terms.
  • Equipment loans: In addition to the SBA, both banks and alternative lenders offer their own types of equipment loans. Equipment loans and leases provide money to small businesses for office equipment, like copy machines and computers, or things such as machinery, tools and vehicles. Instead of paying for the large purchases all at once up front, equipment loans allow business owners to make monthly payments on the items. One benefit of equipment loans is that they are often easier to obtain than some other types of loans because the equipment being purchased or leased serves as collateral. Equipment loans preserve cash flow since they don’t require a large down payment and may offer some tax write-offs.
  • Merchant cash advance: This type of loan is made to a business based on the volume of its monthly credit card transactions. Businesses can typically receive an advance of up to 125 percent of their monthly transaction volume. The terms for repaying a merchant cash advance vary by lender. Some take a fixed amount of money out of a business’s merchant account every day, while others take a percentage of the daily credit card sales. The best candidates for merchant cash advances are businesses with strong credit card sales, such as retailers, restaurants and service businesses. The advantages of merchant cash advances are that they are relatively easy to obtain, funding can be received in as quickly as a few days, and the loan is paid back directly from credit card sales. The biggest downside is the expense: Interest on these loans can run as high as 30 percent a month, depending on the lender and amount borrowed.
  • Lines of credit: Like working-capital loans, lines of credit provide small businesses money for day-to-day cash-flow needs. They are not recommended for larger purchases, and are available for as short as 90 days to as long as several years. With a line of credit, you take only what you need and pay interest only on what you use, rather than the entire amount. These loans are usually unsecured and don’t require any collateral. They also have longer repayment terms and give you the ability to build up your credit rating if you make the interest payments on time. The downsides are the additional fees charged and that they put small businesses in jeopardy of building up a large amount of debt.
  • Professional practice loans: Professional practice loans are designed specifically for providers of professional services, such as businesses in the health care, accounting, legal, insurance, engineering, architecture and veterinary fields. These types of loans are typically used for purchasing a practice, buying real estate, renovating office space, buying new equipment and refinancing debt.
  • Franchise startup loans: Franchise startup loans are designed for entrepreneurs who need financing to help open their own franchise business. These loans, offered by banks and alternative lenders, can be used for working capital, or to pay franchise fees, buy equipment and build stores or restaurants.

Now that you’ve got the basics, you might be ready to make some decisions on which type of loan and provider are right for you. If you’re interested in an alternative loan, check out our best picks for alternative lenders.

Still have more questions about the different loan options? No problem. Here are 10 questions and answers that may help you come to a decision.

Q: How do I know which type of lender is right for my business?

A: Every situation is different, so it is very important to evaluate your needs and situation before choosing which type of lender and loan to pursue.

“If speed is of the essence, then a cash advance or other alternative lending product might be the right answer,” Arora said. “If finding the lowest interest rate is the preference, then an SBA loan or conventional bank loan would be better options.”

Q: If I am applying for an SBA loan, what type of information will the bank ask for?

A: When applying for an SBA loan, small business owners are required to fill out forms and documents for the specific loan they are trying to get. In addition, the SBA encourages borrowers to gather some basic information that all lenders will ask for, regardless of the loan type. The following items are required:

  • Personal background and financial statements
  • Business financial statements
  • Profit and loss statement
  • Projected financial statements
  • Ownership and affiliations
  • Business certificate/license
  • Loan application history
  • Income tax returns
  • Resumes
  • Business overview and history
  • Business lease

Q: What questions will I have to answer when applying for an SBA loan?

A: The SBA recommends being prepared to answer several questions, including the following:

  • Why are you applying for this loan?
  • How will the loan proceeds be used?
  • What assets need to be purchased, and who are your suppliers?
  • What other business debt do you have, and who are your creditors?
  • Who are the members of your management team?

Q: Where can I find an SBA loan application?

A: Loan applications are available on the SBA website.

Q: What will I need if I’m applying for a conventional loan from a bank?

A: When applying for a bank loan, you’ll be required to share all of your financial details. You’ll need to provide your lender with all the financial background on your company, future growth plans and often your personal financial information. The more information you have to illustrate that you’ve run your business well, the more confidence banks will have about investing in you. You will also need to show exactly how you will use the requested money. For example, if you are looking to purchase a new piece of equipment, provide quotes on the exact costs, how much capital you need to facilitate this purchase, and specifically how the new equipment will help grow your business.

Q: What do I need to consider when applying for a loan through an alternative lender?

A: Experts recommend that, when considering an alternative lender, you take several factors into consideration:

  • Interest rates: Small business owners should know that they can pay off the loan relatively quickly to avoid hefty interest charges.
  • Fees and policies: Be sure to speak with each lender’s representative about any fees that may apply when the loan is funded, and how the payback will affect your cash flows, to make sure that you can run your business while paying back the loan.
  • The lender’s ratings and review: There are many companies today that say they are alternative lenders, but try to find a company that has an A+ rating with the Better Business Bureau.

Q. What’s the difference between a direct lender and a lending marketplace?

A.While both help businesses find funding, lending marketplaces use technology to quickly present small businesses with multiple funding options from a variety of funding partners that can satisfy each particular situation, said Stephen Sheinbaum, founder of Bizfi, an alternative finance company.

“In less time than it takes to brew a cup of coffee, a business owner can be looking at real choices tailored to his needs,” Sheinbaum told Business News Daily.

The biggest benefit is the choice they provide. Rather than having to spend time contacting individual direct lenders to find the best deal, lending marketplaces compile all of that information for you, Sheinbaum said.

“In a marketplace environment, they may discover equipment financing meets their needs better than short-term funding,” he said. “They may find that the marketplace can offer financing specifically for franchisees or health care businesses, or they may find that they can get a long-term loan backed by a guarantee from the U.S. Small Business Administration with less paperwork than if they went through a traditional bank.”

Q: What type of information do I need to provide to alternative lenders when applying for a loan?

A: Even though it can be easier to obtain a loan from an alternative lender, you still have to provide them with an array of personal, business and financial information. Not all lenders ask for the same information. Some pieces of information they could request include a plan for how the money will be used, your credit history and a verification of your income and assets.

Q: What do lenders consider when deciding whether or not to approve you for a loan?

A: There are a variety of factors that are considered by both banks and alternative lenders when deciding whether or not to approve you for a loan, including:

  • How long you’ve been in business: The longer the better. The longer track record you have, the more comfortable lenders will feel in loaning you money.
  • Credit score: While some lenders place more stock in credit scores than others, they all take the scores into consideration. Having a bad credit score won’t necessarily rule you out, but it will affect your loan terms. The worse your credit score is, the higher your interest rate is going to be.
  • Monthly revenue: Lenders want to ensure that you have enough money coming into your business to pay off the loan.

Other factors lenders may consider are previous tax returns, whether you have a history of paying creditors on time, whether you have had any bankruptcies or bounced checks, whether you have sufficient collateral and what you plan to use the money for.

In addition to using these factors to determine if you are approved, these same factors, as well as the length of the loan, are used to determine your interest rates.

Q: Does it cost money to apply for a loan?

A: It all depends on the lender. It is important to ask what types of fees are associated with the application. Some lenders charge an application fee, while others charge fees for items tied into the application, such as the cost to run your credit report or get your collateral appraised.

If you think an alternative lender is right for you, we encourage you to check out our roundup of our best picks for various types of loans, our reasoning for picking each and our thorough alternative lender list.


Scaling Up? Lay a Strong Foundation for Your Startup

Scaling Up? Lay a Strong Foundation for Your Startup

Although getting a startup up and running is an immensely challenging task, taking it to the next level can be even more difficult.

A study recently published in Business Horizons found that the transition period between the startup and scaling phases can be a demanding time for entrepreneurs and one that must be navigated successfully in order for a business to grow.

Joseph Picken, the study’s author and founder of the Institute for Innovation and Entrepreneurship at the University of Texas at Dallas, said past research has identified the most common reasons for failure or CEO replacement, but nobody has told the entrepreneur what to do to succeed.

“During transition, the founder and team must impose essential structures and discipline, and lay the foundation for a scalable business,” Picken said in a statement. “The failure to do so will result either in the failure of the venture or the replacement of the founder by a more experienced CEO.”

The study shows that in the startup phase, new ventures are best served by having a loosely structured, flexible, and informal organization, while the rapid growth and scaling phase requires structure, process, and discipline.

Picken said as startups enter this transition period between the two stages, founders must evaluate the business’s needs, assess their personal capabilities and limitations, expand their skill set, and adopt the management practices and leadership behaviors essential to retaining the top job.

In the study, Picken outlines the transition hurdles that have to cleared when evolving from a startup to an organization that’s capable of having sustained and profitable growth:

  1. Setting a direction and maintaining focus
  2. Positioning products/services in an expanded market
  3. Maintaining customer/market responsiveness
  4. Building an organization and management team
  5. Developing effective processes and infrastructures
  6. Building financial capability
  7. Developing an appropriate culture
  8. Managing risks and vulnerabilities

When the time comes for startups to grow up, the entrepreneur also has to grow and learn all the skills to be a CEO, according to Picken.

“If you’re in a large, established organization, you may be groomed for 10, 15 or 20 years before you assume the broader responsibilities of CEO,” Picken said. “An entrepreneur has only a couple of years to do that.”

In order for entrepreneurs to successfully shift from being a founder to a CEO, Picken offers these tips:

  • Shift your attention and focus. Entrepreneurs need to adopt a broader external perspective.
  • Extend the time horizon. Instead of reacting to circumstances, it is critical to start anticipating what’s coming next.
  • Learn new skills. Being a CEO isn’t the same as being a company founder. Entrepreneurs looking to transition into the CEO role need to broaden their functional skills and expertise. They also need to expand their personal skill sets and adopt new leadership styles.
  • Be flexible. When transitioning to a growth stage, entrepreneurs need to be open to new ideas and leverage the experience of others.

Picken said that although it’s hard to do, entrepreneurs have to grow in all these areas simultaneously. He said many people don’t have the perspective or ability to do all of that in a short period of time.

“It’s a tough challenge for a young, inexperienced entrepreneur who has not been there and done that,” Picken said. “You have to recognize you don’t know it all and get a lot of help from mentors and advisors.”


How to Register a Business Name

How to Register a Business Name

How to Register a Business Name

Credit: rangizzz/Shutterstock

The first step to creating your small business is choosing the right name. The name should represent your industry, field or expertise while being catchy, memorable, and relevant to your customers or clientele. However, there are a few simple steps to consider before registering an official name for your future business.

Although you might already be infatuated with the name of your small business, you must ensure someone else hasn’t already claimed it. This helps you verify your company’s name is unique. Otherwise, it could violate trademark law by being too similar to the name of an existing business, in your state or any other, and whose operations are in close relation to your product or service.

Conducting a thorough due diligence check before registering the business entity or buying the domain name will help you avoid future costs in marketing, rebranding and even a possible lawsuit.

Before conducting even the simplest of searches, brainstorm a short list (preferably of five to ten) of possible business names. If you’re stuck, use different words and phrases to say your business name. Get creative! Play around with adjectives, nouns, and adverbs. Not only will this list help you search for pre-existing business names, it will also come in handy if someone else has already claimed your business name. To be sure that you are in no danger of encroaching on a business name or trademark, also add variations in spelling or wording of your potential business names.

Now it’s time to conduct a basis online search with a major search engine, because similarities to your chosen moniker will likely show up here. You should investigate further to see if that business offers a product or service comparable to yours. If there are no readily apparent matches, it does not necessarily mean you are in the clear.

Continue your investigation by entering your business name in more specific and targeted databases. For instance, consider searching in the following business databases, which offer ways to locate a matching or similar business name before you commit to it:

  • U.S. Securities and Exchange Commission
  • ThomasNet
  • Network Solutions
  • Trademarkia.com
  • U.S. Patent and Trademark

When you are nearly certain you can use your business name, go to the Small Business Administration’s website and find the contact information for each state’s secretary of state’s online business registry database. Search your selection as well as variations in each one. If there are no matches, then move to checking with your county clerk’s list of Doing Business As (DBA) names.

Don’t panic if your preferred name is already taken. You may still be able to use it if you are offering a clearly different product or service or are in different states. You can contact your state’s secretary of state’s corporations division. They can work with you to determine that you meet the legal requirements to still use the name.

Once you have a confirmed business name, register it right away, even if you are not ready to conduct business operations. The name may not be available six weeks or six months from now, and the small cost of ensuring it is yours to use early in your preparation will be worth it.

You can register your name through your state government. Procedures will vary depending on your chosen type of legal entity (sole proprietor, LLC, corporation, etc.). Most states require you to at least register as a DBA if you are conducting business under any name other than your given legal name.

Your business name will be the cornerstone of your marketing efforts. By protecting it from the beginning, you ensure it will stand strong against any branding or legal challenges along the way.

Additional reporting by Marci Martin.


How to Choose the Best Legal Structure for Your Business

How to Choose the Best Legal Structure for Your Business

How to Choose the Best Legal Structure for Your Business

Credit: SuriyaPhoto/Shutterstock

The legal structure you choose for your business is one of the most important decisions you will make in the startup process. There are four basic types of business entities, each of which has its own pros and cons.

Your choice of structure can greatly affect the way you run your business, impacting everything from liability and taxes, to control over the company. The key is to figure out which type of entity gives your business the most advantages when it comes to helping you to achieve your organizational and personal financial goals.

This is the simplest form of business entity, and it is used by more than 70 percent of businesses in the United States, according to the Small Business Administration. With sole proprietorship, one person is responsible for all of a company’s profits and debts.

This entity is owned by two or more individuals. There are two types: general partnerships, where all is shared equally; and limited partnerships, where only one partner has control of its operation, while the other person or persons simply contribute to and receive only part of the profit. Partnerships carry a dual status as a sole proprietorship or limited liability partnership (LLP), depending on the entity’s funding and liability structure.

A limited liability company is a hybrid structure that allows owners, partners or shareholders to limit their personal liabilities while enjoying the tax and flexibility benefits of a partnership. Under an LLC, members are protected from personal liability for the debts of the business, as long as it cannot be proven that they have acted in an illegal, unethical or irresponsible manner in carrying out the activities of the business.

The law regards a corporation as an entity that is separate from its owners. It has its own legal rights, independent of its owners — it can sue, be sued, own and sell property, and sell the rights of ownership in the form of stocks.

There are several different types of corporations, including C corporations, S corporations and B corporations. However, many people fail to consider the differences between them. For instance, while S and B corporations provide certain tax advantages over C corporations, there are certain eligibility requirements that your company must meet.

“A common misconception is that all types of corporations are the same,” said Jennifer Friedman, CMO of the small business segment of Wolters Kluwer’s BizFilings and CT Corporation. “A C corporation is different from an S corporation, but most people don’t even know that there are different types until they start doing research.”

For new businesses that could fall into two or more of these categories, it’s not always easy to decide which one to choose. You need to consider your startup’s financial needs, risk and the ability to grow. It can be difficult to switch your legal structure after you’ve registered your business, so choosing correctly at the start is crucial.

In regard to startup and operational complexity, there is nothing simpler than a sole proprietorship. You simply register your name, start doing business, report the profits and pay taxes on it as personal income. However, it can be difficult to procure outside funding. Partnerships, on the other hand, require a signed agreement to define roles and percentages of profits. Corporations and LLCs have various reporting requirements with the state and federal governments.

A corporation carries the least amount of personal liability, since the law holds that it is its own entity. This means that creditors and customers can sue the corporation, but they cannot gain access to any personal assets of the officers or shareholders. An LLC offers the same protection, but with the tax benefits of a sole proprietorship. Partnerships share the liability between the partners as defined by their partnership agreement.

An owner of an LLC will pay taxes, just as a sole proprietor does — all profit is considered to be personal income and is taxed accordingly at the end of the year.

“As a small business owner, you want to avoid double taxation in the early stages,” Friedman told Business News Daily. “The LLC structure prevents that, and makes sure you’re not taxed as a company and as an individual.”

Partners in a partnership also claim their share of the profits as personal income. Your accountant may suggest quarterly or biannual advance payments to minimize the end effect on your return.

A corporation files its own tax return each year, paying tax on profits after expenses, including payroll. If you pay yourself from the corporation, you will pay personal taxes — such as Social Security and Medicare — on your personal return for what you were paid throughout the year.

If it is important for you to have sole or primary control of the business and its activities, a sole proprietorship or an LLC might be the best choice for you. You can negotiate such control in a partnership agreement as well.

A corporation is constructed to have a board of directors that makes the major decisions that guide the company. A single person can control a corporation, especially at its inception; but as it grows, so does the need to operate it as a board-directed entity. Even as a small corporation, the rules intended for larger organizations — such as keeping board-of-directors notes of every major decision that affects the company — still apply.

If you need to obtain outside funding sources — like investor or venture capital, bank loans and other avenues for money — you may be better off establishing a corporation, which has an easier time of obtaining outside funding than does a sole proprietorship. Corporations can sell shares of stock, securing additional funding for growth, while sole proprietors can only obtain funds through their personal accounts, using their personal credit or taking on partners. An LLC can face similar struggles, although, as its own entity, it is not always necessary for the owner to use his or her personal credit or assets.

To operate legally, every business must be licensed. Depending on the type of business and its activities, it may need to be licensed at the local, state and federal levels. In addition to ensuring that your business entity is legally registered, you may need specific permits.

“States have different requirements for different business structures,” Friedman said. “Depending on where you set up, there could be different requirements at the municipal level as well. As you choose your structure, understand the state and industry you’re in. It’s not a ‘one size fits all,’ and businesses may not be aware of what’s applicable to them.”

It’s important to note that the structures discussed here only apply to for-profit businesses. If you’ve done your research and you’re still unsure about which business structure is right for you, Friedman advised speaking with a specialist in business law.

Additional reporting by Marci Martin and Nicole Fallon Taylor. Some source interviews were conducted for a previous version of this article.


12 Things to Do Before Starting a Business

12 Things to Do Before Starting a Business

12 Things to Do Before Starting a Business

Credit: Arseniy Krasnevsky/Shutterstock

Creating a business is a huge undertaking. It’s not a simple path, and often includes details you may never have considered.

To make sure you’ve covered all your bases before opening your doors, Business News Daily asked entrepreneurs for their best advice when starting a business:

“One of the most important things to do before starting a business is to research the competitive landscape. Just because you have a brilliant idea does not mean other people haven’t also had the same idea. If you can’t offer something better and/or cheaper than your competitors, you might want to re-think starting a business in that area.” – Ian Wright, founder, British Business Energy

“The key to starting a new business is to be organized. So many people are driven and have great ideas, but they fail to follow through with them due to their organization. Small business owners wear many hats. Without a plan to stay organized, you’ll find yourself being pulled in so many directions that you won’t get anything accomplished.” – Eric Brantner, founder, Scribblrs.com

“Every entrepreneur should be able to answer the question, ‘Why are you doing this?’ It seems like a simple question, but there will inevitably be times when things go wrong, hope is dwindling and you need to remind yourself of why you’re in it. As an entrepreneur, building and growth is a process that never fully ends. It is great practice to give yourself a mission statement to maintain focus on the project goals as well as personal ones.”– Noah Krinick, founder and partner, Solo Rugs

“The No. 1 thing I would tell a new business owner is that they should have a coach or mentor. I’ve had a coach now for a year and a half and it has easily been the best decision I’ve made. Without his help I wouldn’t have been able to grow my company and keep my best employees.” – Ben Walker, founder and CEO, Transcription Outsourcing

“Survey a focus group of the target demographic for the service or product. It is crucial to make sure you are delivering what your customer wants, not what you want. This will give you insight into your customer’s buying decision and save you lots of experimenting down the road.” – Sonia F. Lakhany, attorney, Lackhany Law

“If there is one thing I would advise for all entrepreneurs before officially opening a new business, it’s to seek legal counsel. We often make the assumption that legal counsel is for when we get ourselves into trouble, but preventative and proactive legal preparation can be the very best way to set your business on the path to long-term success. When you call on legal counsel after you’ve run into a problem, it’s often too late or could critically impact your business in both the short and long term. Investing in their insight at the start of your business can pay a huge return later on by keeping you out of trouble before you even get into it.” – Katy Blevins, co-founder and corporate publicist, The Modern Femme Movement

“Get your personal credit score as high as possible. No life event under your control will ruin your credit score quite as much as starting a business, with the exception of a divorce. You will probably get into a lot of debt starting out. So you’ll have to be able to finance [your personal life] through your own savings. If your credit score isn’t so great, you’ll [only] be able to borrow less money at higher interest rates. If you want to start a business, increase your credit score so you have a [greater] ability to borrow as much as you need.” – Marc Prosser, small business expert and co-founder, Fit Small Business

“I had a full-time job as I considered starting my own business in 2009, but I did a lot of groundwork before I started, and bringing on an accountant was an important step. It helped me understand what I needed to do to make this work from a profit standpoint, [as well as] the ins and outs of state, federal and local taxes.” – Sarah Burningham, president and founder, Little Bird

“The first thing to do when contemplating starting a business is to understand the commitment required. You will need to talk with many entrepreneurs, ideally those who have succeeded and those who have failed. Their experience needs to be recent to be useful, as it will provide valuable context for your endeavor. The most helpful advice to capture is the impact on their lifestyle, such as finances, personal relationships, health, emotional stability, and self-esteem.” – Todd Rhoad, managing director of BT Consulting, and partner with Peachtree Recovery Services Inc.

“You need to get organized with your taxes and fees. You have to figure out how much your payroll is going to be in order to make your tax payments timely. The timing can vary depending on your payroll. You also have to figure out other business taxes, such as city, county and state. There isn’t one list of all the fees you may have to pay, so you need to get organized and figure this out ahead of time. Forgetting and filing late can make those late charges add up quickly.” – Travis Sickle, certified financial planner, Sickle Hunter Financial Advisors

“The most important thing a small business owner can do is plan for cyclical downswings in their business activity and revenue. There is a lot to be done when you’re not providing your service or selling your goods. Make a list of marketing activities, touch base with contacts, organize your files and office. A lull in business is an opportunity to improve and plan. Likewise, revenue will come in waves. Cash flow is not a constant trickle, but expenses are. The small business owner should plan on either starting with cash reserves or trying to acquire a line of credit from a local bank.”  – Joshua E. Stern Esq., Law Offices of Joshua E. Stern

“The most important thing I had other than faith and tenacity, was my exit strategy. I knew if all else failed, that no matter what, I would be able to sell the huge inventory that I ordered, and only lose a tiny bit of money, rather than my entire investment. Knowing that I had a way out that would not hurt too much, made it easy for me to go full throttle and go forward.” – Sandy Stein, president, Alexx Inc. (Finders Key Purse)

Additional reporting by Brittney Helmrich and Kim Ann Zimmermann.


How to Start a Business: A Step-by-Step Guide

How to Start a Business: A Step-by-Step Guide

How to Start a Business: A Step-by-Step Guide

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Right now, aspiring entrepreneurs all across the country are planning their paths to business ownership. It’s a journey that requires a lot of hard work, and many people end up failing. But if your company survives, the rewards of entrepreneurship are well worth the obstacles you’ll face on the road to success.

If you think you’re ready to start your first business, here’s a step-by-step overview of what you need to do to make it happen.

Every new business starts with an idea. Maybe there’s something you’re really knowledgeable and passionate about, or perhaps you think you’ve found a way to fill a gap in the marketplace. Wherever your interests lie, it’s almost guaranteed that there’s a way to turn it into a business.

Once you’ve narrowed your list of ideas down to one or two, do a quick search for existing companies in your chosen industry. Learn what the current brand leaders are doing, and figure out how you can do it better. If you think your business can deliver something other companies don’t (or deliver the same thing, but faster and cheaper), you’ve got a solid idea and are ready to create a business plan.

Another option is to open a franchise of an established company. The concept, brand following and business model are already in place; all you need is a good location and the means to fund your operation.

David Silverstein, a global business consultant and CEO of operational strategy consulting firm BMGI, cautioned would-be entrepreneurs against starting a business just for the sake of being a business owner: You need a viable business model, not just an idea, he said.

Now that you have your idea in place, you need to ask yourself a few important questions: What is the purpose of your business? Who are you selling to? What are your end goals? How will you finance your startup costs? All of these questions can be answered in a well-written business plan.

A business plan helps you figure out where your company is going, how it will overcome any potential difficulties and what you need to sustain it. A full guide to writing your plan can be found here.

Starting any business has a price, so you need to determine how you’re going to cover those costs. Do you have the means to fund your startup, or will you need to borrow money? If you are planning to make your new business your full-time job, it’s wise to wait until you have at least some money put away for startup costs and for sustaining yourself in the beginning before you start making a profit.

While many entrepreneurs put their own money into their new companies, it’s very possible that you’ll need financial assistance. A commercial loan through a bank is a good starting point, although these are often difficult to secure. If you are unable to take out a bank loan, you can apply for a small business loan through the Small Business Administration (SBA) or an alternative lender.

Startups requiring a lot more funding up front may want to consider an investor. Investors usually provide several million dollars or more to a fledgling company, with the expectation that the backers will have a hands-on role in running your business. Alternatively, you could launch an equity crowdfunding campaign to raise smaller amounts of money from multiple backers.

Before you can register your company, you need to decide what kind of entity it is. Your business structure legally affects everything from how you file your taxes to your personal liability if something goes wrong.

If you own the business entirely by yourself and plan to be responsible for all debts and obligations, you can register for a sole proprietorship. Alternatively, a partnership, as its name implies, means that two or more people are held personally liable as business owners.

If you want to separate your personal liability from your company’s liability, you may want to consider forming one of several different types of corporations. This makes a business a separate entity apart from its owners, and therefore, corporations can own property, assume liability, pay taxes, enter into contracts, sue and be sued like any other individual. One of the most common structures for small businesses, however, is the limited liability corporation (LLC). This hybrid structure has the legal protections of a corporation while allowing for the tax benefits of a partnership.

Ultimately, it is up to you to determine which type of entity is best for your current needs and future business goals. More details about the different business structures can be found here.

To become an officially recognized business entity, you must register with the government. Corporations will need an “articles of incorporation” document, which includes your business name, business purpose, corporate structure, stock details and other information about your company. Otherwise, you will just need to register your business name, which can be your legal name, a fictitious “Doing Business As” name (if you are the sole proprietor), or the name you’ve come up with for your company. You may also want to take steps to trademark your business name for extra legal protection.

After you register your business, the next step is obtaining an employer identification number (EIN) from the IRS. While this is not required for sole proprietorships with no employees, you may want to apply for one anyway to keep your personal and business taxes separate, or simply to save yourself the trouble later on if you decide to hire someone else. The IRS has provided a checklist to determine whether you will require an EIN to run your business. If you do need an EIN, you can register online for free.

Regardless of whether or not you need an EIN, you will need to file certain forms to fulfill your federal and state income tax obligations. The forms you need are determined by your business structure. A complete list of the forms each type of entity will need can be found on the SBA website. You can also find state-specific tax obligations there. Some businesses may also require federal or state licenses and permits in order to operate. You can use the SBA’s database to search for licensing requirements by state and business type.

Just about every business today needs a solid set of tech tools to operate. Some will be more tech-heavy than others depending on the industry, but at the very least, you will likely need a powerful and reliable business laptop or smart device to help you keep things organized.

There are a lot of different factors to think about when you’re looking for business technology. Since many key business functions — accounting, invoicing, point-of-sale software, presentations, etc. — can now be managed via mobile apps, you might be able to get away with just a smartphone or tablet. For more complex business functions, you’ll want to consider a computer with strong security features, storage options and performance speed.

For those who want to operate their business on a smart device, think about whether you’ll need a separate phone or tablet for your professional apps and data. For instance, you could route your calls through a third-party app on your existing phone so you don’t need to give out your personal cell number. However, if you use the same apps for business and personal purposes, it might be easier to separate them so you don’t accidentally share information with the wrong audience.

It might slip your mind as something you’ll “get around to” eventually, but purchasing the right insurance for your business is an important step that should happen before you officially launch. Dealing with incidents like property damage, theft or even a customer lawsuit can be costly, and you need to be sure that you’re properly protected.

Gyawu Mahama, social media and marketing manager at small business insurer Hiscox, said to choose insurance that’s tailored to your specific business practices to ensure you’re not paying for more coverage than you need.

“As a small business owner, you don’t need a once-size-fits-all insurance plan,” Mahama said. “Coverage doesn’t have to cost a lot. General- and professional-liability insurance coverage for a sole proprietorship can be purchased for a few hundred dollars a year.”

If your business will have employees, you will, at minimum, need to purchase workers’ compensation and unemployment insurance. You may also need other types of coverage depending on your location and industry, but most small businesses are advised to purchase general liability (GL) insurance, or a business owner’s policy. Mahama said GL covers three basic categories: property damage, bodily injury, and personal injury to yourself or a third party.

If your business provides a service, you may also want to consider professional liability insurance. It covers you if you do something wrong or neglect to do something you should have done while operating your business, Mahama said.

Mahama advised checking in with your insurance provider throughout the year to keep the provider updated on any changes happening in your business.

Running a business can be overwhelming, and you’re probably not going to be able to do it all on your own. That’s where third-party vendors come in. Companies in every industry from HR to business phone systems exist to partner with you and help you run your business better.

When you’re searching for B2B partners, you’ll have to choose very carefully. These companies will have access to vital and potentially sensitive business data, so it’s critical to find someone you can trust. In our guide to choosing business partners, our expert sources recommended asking potential vendors about their experience in your industry, their track record with existing clients, and what kind of growth they’ve helped other clients achieve.

Unless you’re planning to be your only employee, you’re going to need to hire a great team to get your company off the ground. Joe Zawadzki, CEO and founder of MediaMath, said entrepreneurs need to give the “people” element of their businesses the same attention they give their products.

“Your product is built by people,” Zawadski said. “Identifying your founding team, understanding what gaps exist, and [determining] how and when you will address them should be top priority. Figuring out how the team will work together … is equally important. Defining roles and responsibility, division of labor, how to give feedback, or how to work together when not everyone is in the same room will save you a lot of headaches down the line.”

A great startup idea won’t do you any good if people don’t know about it. Before you start selling your product or service, you need to build up your brand and get a following of people ready to jump when you open your literal or figurative doors for business.

A company website and social media profiles are practically essential for any small business in today’s world. Create a logo that can help people easily identify your brand, and be consistent in using it across all of your platforms. Use social media to spread the word about your new company. You can even use social media as a promotional tool to offer coupons and discounts to followers once you launch. Be sure to also keep these digital assets up to date with relevant, interesting content about your business and industry.

For more information on creating an effective marketing plan for your business, visit our guide here.

Your launch and first sales are only the beginning of your task as an entrepreneur. In order to make a profit and stay afloat, you always need to be growing your business. It’s going to take time and effort, but you’ll get out of your business what you put into it.

Collaborating with more established brands in your industry is a great way to achieve growth. Reach out to other companies or even influential bloggers and ask for some promotion in exchange for a free product sample or service. Partner with a charity organization and volunteer some of your time or products to get your name out there. In this article, Business News Daily offers some suggestions for rapid growth.

Starting a business can be risky and challenging, but armed with the proper tools and information, you can put yourself on the path to entrepreneurship.


Business Plan Tools for Startups and Small Businesses

Business Plan Tools for Startups and Small Businesses

Business Plan Tools for Startups and Small Businesses

Credit: Ollyy/Shutterstock

Have a killer business idea? A killer business plan can help you turn it into a successful business. Creating a well-crafted business plan is no easy task, however. You’ll need to not only flesh out your idea, but also have a deep understanding of the different aspects of running a business — before you even start one.

Figuring out how to do this correctly is hard enough, but there are several tools available to make this arduous task a little bit easier for would-be entrepreneurs. Instead of starting from scratch, here are a collection of business plan templates, software, apps and services to help you start a business the right way with a professional business plan.

Business plan templates show you exactly what a business plan is supposed to look like and what goes in each section. You can find them as downloadable sample business plans that you can copy and modify to fit your business, or as fill-in-the-blank or question-and-answer forms. There are also different types of business plans: simple business plans that cover the essentials, comprehensive ones that cover every aspect of a business, and those designed for a specific purpose, such as to raise funding or find business partners. Here are some business plan templates worth considering.

The $100 Startup One-Page Business Plan. One-page business plans take the fuss out creating a business plan by getting down to the basics of what your business is about and how you intend to meet its goals. Think of it like writing down your business on a napkin, but with a purpose. The $100 Startup’s One-Page Business Plan is one such business plan template. Simply answer a few questions like “What will you sell?” “What will you charge?” and “How will customers learn about your business?” in a couple sentences and you’re good to go.

SCORE Business Plan Templates. Small business resource SCORE has a collection of free PDF and Word business plan templates for startups, established businesses and even nonprofits. The organization also offers additional types of business planning resources and templates, such as financial projections, market research, sales forecasts, SWOT analysis and more. Once your business plan is finished, you can meet with a SCORE mentor for feedback and guidance.

Bplans.com. Looking for free sample business plans? Bplans.com offers a wide range of them for all types of businesses, including retailers, online businesses, service providers, restaurants and more. These sample templates come complete with a table of contents and sections like executive summary, company summary, products and services, financial planning, market analysis and other standard business plan sections. Bplans.com offers more than 500 sample business plans that can be downloaded as Word, PDF and other file formats.

Rocket Lawyer. If you need to make your business plan a legal document, check out Rocket Lawyer. Rocket Lawyer lets you create your own legal documents and provides access to various legal services. Its business plans section lets you create business plans in three steps: build, save and sign. You can also print and share your business plans for easy access. Rocket Lawyer business plans come with standard parts of a business plan, as well as sections for funding requests and appendix for supporting documents.

You don’t have to be glued to your desk to create a business plan. There are several business plan mobile apps that will let you write a business plan anytime, anywhere right on your smartphone or tablet. Here are two worth checking out.

StartPad. Recognized by Entrepreneur and Forbes, StartPad is one of the top business plan apps available for the iPad. This app offers a wide range of business planning resources, such as strategic business planning tutorials, professionally made sample business plans, financial projections and other reports. Business plans created on StartPad can also be exported as high-resolution PDFs or printed out. The basic version of StartPad is free to download and use, but requires in-app purchases for additional features. Get StartPad from the Apple App Store.

Business Plan & Start Startup. Are you an Android user? Business Plan & Start Startup is the app for you. This app isn’t just for creating a business plan, however. It also aims to do three things for entrepreneurs: help start a business the right way with a well-crafted business plan; keep them motivated and on track; and provide a community of fellow entrepreneurs, small business owners and experts to help guide users in creating their business plan and running their businesses. Business Plan & Start Startup can be downloaded from the Google Play marketplace

Don’t want to use any of the above? Try an online business plan service, which guides you throughout the business plan writing process. The services offer similar tools as business plan software — such as document collections and chart generators — with the difference being that they typically offer business and legal specialists who can help you better understand complex aspects of your business and business plan. Two online business plan services to consider are LivePlan and the SBA Business Plan Tool.

Bizplan.com. Need funding? Check out startup.co’s business plan service, bizplan.com. This web-based business plan comes with a step-by-step guide to help you build your business plan and optimize it for investors. Business plans can also be completely tailored to your business with logos, graphics, layouts and custom designs to fit your brand. After building your business plan, you can share and publish it on startup.co’s crowdfunding site, fundable.com, where you can connect with investors and add elements like photos and videos to highlight your business.

LivePlan. LivePlan is a cloud-based business plan service that offers everything from document generation to planning tools, financial calculators, guidance resources and more. The service guides you through each component of the business plan and provides step-by-step instructions and advice based on the objective of your business plan (starting a business, business development, funding, etc.)

SBA Business Plan Tool. The U.S. Small Business Administration’s (SBA) Business Plan Tool covers everything from executive summary and company description to market research, product line, marketing and sales, and financial projections in detail. You can also personalize your business plan with your company logo, as well as save, print and update your business plan as needed.


The Dos and Don’ts of Writing a Great Business Plan

The Dos and Don’ts of Writing a Great Business Plan

The Dos and Don'ts of Writing a Great Business Plan

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If you’re planning a road trip across the country, you’ve likely researched the routes that best suit your desires for the trip. Perhaps you chose scenic roads with lots of stops along the way, or maybe you decided to take the quickest track. To make it to your destination, you need to know where you’re going and how you’re getting there.

Preparing a business plan is just the same. Without a clear, objective proposal, you cannot expect your company to evolve successfully. The plan should serve to guide you throughout the startup process.

Brian S. Cohen, an operating partner at Altamont Capital Partners and member of Young Presidents’ Organization, a global network of young chief executives, likened the business plan to a road map for the company.

“You don’t want to go into any situation blind,” said Cohen. “You need a map for how you are going to achieve your objectives. The business plan serves that function.”

Based on advice from our expert sources, here are a few specific dos and don’ts to consider while formulating your plan.

Editor’s note: If you’re looking for information to help you with writing your business plan, use the questionnaire below to have our sister site provide you with information from a variety of vendors for free.

If you want your company to succeed, then all employees should understand the business plan’s dynamics. It is not a document that you should lock away.

“The business plan keeps an organization focused, [and] it needs to be shared,” Cohen told Business News Daily. “Too many companies treat it as a confidential document to be kept away from the ‘prying eyes’ of the rank-and-file employees. I believe the business plan should be shared, discussed and amended where appropriate, through an open loop of feedback and insights.”

The more people who are involved, the more ideas you can circulate around the company, Cohen said. It is important to consider every worker’s input to ensure that the outcome is something that’s pleasant to all.

You don’t need to have an over-the-top, elaborate document, fancy formatting or flashy decor. However, much like a road map, it must make sense to you as well as to your company’s employees.

Start your plan, said Cohen, by using a specific outline called SWOT, which stands for strengths, weaknesses, opportunities and threats. First, create an executive summary, in which you describe in what field you wish to succeed, and how and why you intend on doing so. And then, list your company’s strengths and weaknesses as well as opportunities for growth, and detail the threats to it that might hinder the achievement of those goals.

As with any business project, research is absolutely critical to a solid business plan.

“Research is one of the big value-adds of writing a business plan,” said Joseph Ferriolo, director of Wise Business Plans. “Research forces companies to learn what they can expect to make and what the industry trends are.”

If the research indicates that your idea is viable, then you can proceed by writing down the goods or services you offer, your marketing plan, how much funding you need and your goals. For more ideas on specific points to include in your business plan,

Your plan is there for a reason. Don’t be afraid to refer to it as much as possible — think of it as checking the map when you’ve made a wrong turn. There is nothing wrong with using your plan to get back on track or to remain there.

“The biggest mistake people make is this: They prepare the document and then put it in a drawer and never look at it again. That’s self-defeating,” Cohen said.

Finally, remember that you should revisit your business plan as your company grows.

“Don’t just make the business plan and use it for funding — really benchmark your company against it,” Ferriolo said. “Reference the plan monthly and quarterly, and revise your research and estimates as you proceed. Being accountable to the vision you set forth will help keep you in line and successful.”

Editing and updating is always a good idea, too; you can never make too many revisions. Cohen said that a business plan is “a document that is never complete.”


Writing a Business Plan: Tips from the SBA

Writing a Business Plan: Tips from the SBA

Writing a Business Plan: Tips from the SBA

Credit: DT10/Shutterstock

The best way to turn your great business idea into a reality is through the creation and use of a well-thought-out business plan. A strong business plan not only attracts investors or secures financing in the early stages of business development, but can also function as a roadmap for the future.

Great business plans have a structure that allows you to define what your business is, the market it serves, how it will conduct operations and the money it will make and spend. Here are the sections the Small Business Administration recommends including in your business plan.

Executive Summary. The executive summary is considered the most important part of the business plan, and is usually written last. Its purpose is to summarize the rest of the plan, introducing the reader to your business in its most condensed form. It should talk about the highlights of your business, your mission statement, the history of your company and what you see in its future.

Company Description. This section goes into more detail about your products and services, how they meet the demands of the market and the differentiators that set you apart from your competitors.

Editor’s note: If you’re looking for information to help you with writing your business plan, use the questionnaire below to have our sister site provide you with information from a variety of vendors for free.

Market Analysis. This is where you show off what you know about your industry, and in particular, the market your product or service will serve. Discuss your target market, its size, the distinguishing characteristics of your offering, and how much market share you can capitalize on accordingly.

Organization and Management. This details how you are going to run your company and conduct day-to-day operations to meet company goals. Talk about organizational structure, the management team and what makes this team qualified to run the company.

Service or Product Line. In this section, describe your product or service and the consumer needs that it meets. If applicable, talk about patents filed on intellectual property. Describe the product’s life cycle, and any research and development activities for new versions or products.

Marketing and Sales. In this section, discuss your overall marketing strategy, including market penetration, growth, channels of distribution and communication. Your sales strategy includes your sales force and sales activities — what will get your product or service into the hands of the customers your marketing strategy created.

Financial Projections. Here, you will discuss historical financial data and the prospective financial data developed after you’ve analyzed the market and set clear objectives for your business.  Projections should explain any assumptions you’ve made in developing the data.

Funding Request. If you are planning on using your business plan with financing institutions or investors, your business plan must include a funding request. Discuss your current funding requirement, the requirement over the next five years and how you intend to use the funds.

Appendix. This is not in the main body in your business plan but can contain data that would be of interest to financial backers. This can be your personal credit history, résumés, letters of reference, contracts, list of business consultants and other documents.

In an email interview with Business News Daily, Tameka Montgomery, associate administrator of the SBA’s Office of Entrepreneurial Development, shared some additional thoughts on what entrepreneurs should know about writing a business plan.

Business News Daily: What are the most important qualities of a good business plan?

Tameka Montgomery: It’s very important your business plan is thorough and well written, but you also want it to be clear on what you have to offer. Ask yourself: Beyond basic products or services, what are you really selling? Identify your niche. You don’t want to become a jack-of-all trades and master of none, because this can have a negative impact on business growth. As a smaller business, it’s often a better strategy to divide your products or services into manageable market niches. Small operations can then offer specialized goods and services that are attractive to a specific group of prospective buyers.

BND: What are some of the challenges new business owners face in creating their business plans?

Montgomery: One of the big challenges for smaller businesses is actually building a business plan. SBA can help [with its] Build a Business Plan online tool. It provides a step-by-step guide to help new business owners through the process of creating a basic, downloadable business plan. The great thing about this tool is they can build a plan in smaller bites, save their progress and return at their leisure.

BND: Is there anything entrepreneurs often overlook when making a business plan?

Montgomery: Entrepreneurs often overlook concrete, specific plans and sales forecasts. All businesses need to project sales because the plan versus actual impact of sales is the key to ongoing management in changing times. Your costs and expenses pivot on sales.

BND: Do you have any general tips for creating a good business plan?

Montgomery: Business owners should reach out for help. SBA has an extensive network leveraged through our resource partners and available to small businesses nationwide. The resource partners include 950 small business development centers, more than 100 women’s business centers, and 350 chapters of SCORE volunteers who provide training and counseling. Counseling is free, and training courses may have a small fee to cover costs through this strong network that provides management and technical assistance. In addition, SBA’s online training offers free courses and online tools to assist entrepreneurs with business management resources.

Ready to write your business plan? Here are some more free templates to help you get started.

Editor’s note: If you’re looking for information to help you with writing your business plan, use the questionnaire below to have our sister site provide you with information from a variety of vendors for free.