Special Requirements and Needs

You are not ready to start your business until you have considered the special requirements of your proposed new enterprise. For instance, what laws and regulations will affect you? To what taxes will your business be subject? How many kinds and how much insurance should you carry? Must your proposed business meet any special licensing or zoning requirements?

Laws and Regulations

The more common types of laws and regulations are reviewed briefly here but this section is not intended to substitute for legal advice. The services of a competent attorney when you require legal assistance is a business expense which will pay for itself.

Licensing

Licensing controls directly affect many small businesses. The degree of regulation will vary, depending upon the type and location of the enterprise. If your operations are intrastate you will be concerned primarily with State and local rather than Federal licensing. Businesses frequently subject to State or local control are retail food establishments, drinking places, barber shops, beauty shops, plumbing firms and taxi companies. These are primarily service businesses, subject to regulations for the protection of public health and morals.

Retail stores, devoted exclusively to handling merchandise, may not be required to have a license but are subject to regulations dealing with fire, safety, and zoning restrictions.

Most licenses require payments of fees and are usually issued on an annual basis. Ordinarily, as a prerequisite to the issuance of a license, a written application is required. State, municipal and county authorities should be contacted for complete information regarding licensing.

Regulations for Consumer Protection

In addition to the licenses referred to above, laws and regulations are also designed for consumer protection. Some may directly affect your business practices.

For example, the Consumer Credit Protection Act became the law of the land on July 1,1969. This is commonly known as the "Truth-in-Lending Act". If you extend credit to your customers, you must make a meaningful disclosure of credit terms in prescribed standard terminology so consumers may compare more readily the various credit terms available to them.

"Truth in Fabrics" legislation also has been enacted for consumer protection. This legislation requires informative labeling and advertising of textile fiber products. If you sell or advertise textile products either as a retailer or wholesaler, you share the manufacturers' responsibility for seeing that they are properly labeled and advertised for fiber content. If you advertise wearing apparel or household fabric products in newspapers having interstate circulation or offer for sale cloth items previously shipped in interstate commerce, the Federal legislation applies to you whether you actually market goods across state lines or not. This means the vast majority of retailers handling textiles have definite responsibilities under labeling law.

Other laws are designed to protect the consumer directly, such as the Food, Drug and Cosmetic Act and the Flammable Fabric Act. The consumer benefits too from laws which provide freedom of competition as discussed below.

Laws Protecting the Environment

In recent years, concern about protecting the environment has produced regulations to decrease pollution to air, water, and other parts of the environment. Determine what pollution laws and regulations, if any, apply to your prospective business. Good starting points for this check are the trade association for business or your local Chamber of Commerce.

Laws Encouraging Competition

Some business practices are prohibited or restricted by legislation to encourage competition. Federal laws govern interstate commerce, while State legislation regulates intrastate transactions. The broad body of Federal legislation encouraging free private enterprise includes the Sherman, Clayton, and Federal Trade Commission Acts. Comparable State laws have also been passed. The purpose of these laws is to encourage competition by prohibiting or restricting certain types of business activities such as: contracts, combinations, and conspiracies in restraint of trade; price discrimination between purchasers of commodities of like grade and quality; false advertising, disparagement of competitors and misrepresentation.

From time to time these statutes are amended, and new interpretations are made by the courts. Your lawyer, Chamber of Commerce or business association can tell you how such laws or proposed laws may affect you.

Labor Relations

Federal and State employer-employee relations legislation deals with settlement of labor disputes; wages, hours and working conditions; fair-employment practices; and economic security.

The National Labor Relations Act, the Taft-Hartley Act and the Labor Management Reporting and Disclosure Act are three major Federal acts dealing with settlement of labor disputes. They guarantee the right of employees engaged in interstate commerce to organize and bargain collectively with their employers, or to refrain from such activities. States also have enacted laws to uphold collective bargaining and to define unfair labor practices.

Fair Labor Standards

Wages, hours and working conditions are regulated by the Fair Labor Standards Act. The act provides for minimum wages, maximum hours, overtime pay, equal pay, recordkeeping and child labor limitations. In addition to this Act the Walsh-Healey Public Contracts Act, the Davis-Bacon Act, and other related acts establish wages, hours, and working conditions applicable to Government contractors. Whether your employees will be covered depends on your individual situation. Obtain specific information from your nearest office of the Wage, Hour and Public Contracts Division, Department of Labor.

OSHA

Be aware also, of the Occupational Safety and Health Act (OSHA) of 1970. This law makes each employer responsible for furnishing employees places of employment free from recognized hazards causing, or likely to cause, death or serious physical harm. The employer must comply with safety and health standards promulgated under the Act. It is every employee's duty to comply with these safety and health standards and all rules, regulations, and orders issued pursuant to the Act which are applicable to their own actions and conduct. Specific information can be obtained from your nearest office of the Occupational Safety and Health Administration.

Fair Employment Practices

Fair employment practices are established by the Federal Civil Rights Act of 1964 which makes it unlawful to discriminate on the basis of race, religion, age, or sex as a condition of employment. Many states have enacted fair employment practice laws. As a small business owner soliciting and selecting employees, you must abide by the standards established by such laws.

Say that you are the sort who is starting new small business. You Have given focus to the overall opportunities for success, and
have chosen the new company you wish to establish.

What practical issues will you face in establishing your business? How Much cash will you need for starting new small business?
Where can you get it? What form of business organization will you have? Where should you locate the business? (start business tips
to follow along )

The first question you need to reply is: How much money will I need? But this question can not be answered until several other
questions are answered and several decisions are made.

To decide how much money is needed to start a company, enter all Of your potential income and all your planned expenses onto a job
sheet or form.

Even though you may feel that This Type of preparation is more than You need to start a simple small business it's beneficial to
begin with this approach to management which puts down figures in black and white. You will discover the exact same approach
valuable in an established business.

First, estimate your sales quantity. This will depend on the overall Quantity of business in the region, the number and ability of
opponents now sharing that company, and your own capability to compete for the customer's dollar. Obtain assistance in making your
sales estimate from wholesalers, trade associations, your banker, and other business-people. Several company and statistical
publications could be useful in making sales volume quotes.

In reaching your final estimate of earnings don't be over-enthusiastic. A new company generally grows slowly at the beginning.
Should you overestimate sales you are most likely to invest too much in gear and first inventory, and devote yourself to thicker
operating expenses compared to your actual sales volume will warrant. Since you're just starting up you might have no sales for
the first few months. At any rate you can expect your first few months to be quite low.

You must also determine what proportion of your sales will be cash And what percentage will be sold on credit. If you estimate
that a particular part of the earnings are going to be on charge then you have to figure whenever you are going to have the money
for these earnings. 1 month? 2 months? More? Never?

Next, in our guide to starting new small business, estimate how Much cash will be paid out. Bear in mind that in starting a
business you may be purchasing equipment, paying fees and licenses, which makes deposits on lease, utilities and so forth, several
months until you open the door. A few of these expenses are easy to estimate. In case you have decided to lease a building (more
about this later) then you know what your deposits will be and how much you will have to pay out each month. You can probably get
the cost of fees, licenses and utility deposits with a few telephone calls.

Other expense figures may take a little more work for you. 1 way Is to obtain typical operating ratios for the type of company in
which you're interested. Among the sources for such ratios include Dun & Bradstreet, Inc., trade associations, publishers of trade
magazines, specialized accounting firms, industrial companies, and colleges and universities. The typical ratios for your type of
company multiplied by your projected sales volume will serve as bench marks for estimating the several items of expenditure. But
do not rely solely on this method for estimating each cost item. Verify and change these quotes through investigation and quotes
in the specific market area in which you plan to operate.

Don't forget to pay yourself also. You Might Need cash to live on if You have to quit your job. If your partner is working and can
encourage the household for a while you might not need to withdraw cash from the business. The longer you can go without taking
money out, the quicker you'll develop a strong cash position. Now you've estimated your cash receipts and expenditures, write down
the quantity of cash you'll put into the company to begin. This goes online 1 at the example below. Next, add lines 1 and 2 for
your first month to get line 3. Then add up all of the expenses to get 5. Subtract line 5 from line 3 to get line 6. This money at
the end of month then goes to line 1 to the beginning of the next month, and so on.

Should you continue this for the Whole year, very shortly you will find You have negative amounts or a negative cash flow. About
this time you'll also understand that you should be operating on this form with a pencil which has a fantastic eraser.

In this overly-simplified illustration, you see that by the end of June you are minus $200 in money. Two solutions can be tried -
reduce your purchases in June by $200 or begin with $200 more. You may not be able to reduce expenses (they will likely go up as
your business starts). That means you will have to put in $200 more to begin with. If all you have is $4000 then the additional
$200 you need is funding you must get from somewhere else.

Do not be fooled by this simple illustration. Many small businesses Start with the 200, and attempt to get the $4000 from
somewhere else. Since a Major cause of failure in the first phases of a business is Under-capitalization, be very careful in your
planning at this point. You can Almost always plan on some unexpected expenses and a few delays in expected income.

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