In Business : Small business provides Island's economic core
Members of SCORE (Service Corp of Retired Executives), an organization created and supported by the U.S. Small Business Administration, offer in-person and online counseling for both for-profit and nonprofit organizations on Martha's Vineyard.
In a new, regular column, The Times has invited SCORE members to discuss business issues familiar to Vineyard business owners and managers. SCORE members will also answer questions from readers, posted at mvtimes.com.
The U.S. Small Business Administration (SBA) says that small business is where it is for employment (49 percent). And 99.7 percent of all businesses are, by federal definition, "small" because they employ up to 500 workers. By that definition, here on the Island nearly 100 percent of the businesses are "small" and 100 percent of those working here in the private sector are employed by a small business.
While small businesses on the Island strive to carve out a unique niche, owners often are faced with the same questions. Recently Islanders asked SCORE counselors these questions.
Question: Should I start a small business in this economy?
Answer: Yes and no.
Starting your own business is not the way to escape a bad work situation — a bad boss, long hours, too little income.
If you want to start a business because you are tired of working for others, which SCORE counselors often hear, that may not be enough of a reason. After all, successful small business operations require enormous hours of commitment. In fact, you hear small business owners saying that they are working 24/7.
If you have the time, the energy and the financial resources plus a great idea, the answer is yes. A "great idea" may be a new product or service. Or a "great idea" may be a way to do something that is more efficient or effective than what is already in the marketplace.
Although the current economy is often described as "sluggish," getting started takes time and so your timing may, in fact, be perfect. Just about the time you are ready to "launch," the economy may be healthier than it is right now and a pent-up demand may have been created.
Q: How can I write a business plan for a business that is just an idea right now?
A: Before you get started may, in fact, be the best time to write a business plan. And do not be surprised if you have the answers to most of the important questions in mind but not yet committed to paper. The process may also help you develop the answers to key questions as you create an executive summary, a description of the business, financial forecasts, and supporting data.
Q: I am about to launch my business and am wondering if I need to go to the trouble to incorporate. If I do, what type of incorporation is best for me?
A: A SCORE counselor would tell you that we need more information to be able to answer this question. Incorporation decisions are based on both the company's financials as well as legal issues, including liability and ownership.
The SCORE booklet "Simple Steps for Starting your Business" provides brief explanations of the types of legal structures available to for-profit and nonprofit organizations.
To summarize, for-profit companies may be created as: a sole proprietorship, partnership, "C" or conventional corporation, "S" or subchapter corporation and limited liability company (LLC). Each classification has distinct advantages and disadvantages, including the extent of liability protection and taxation. You should consult both an attorney and an accountant before making this decision. However, no decision you make is final: as the nature of a company changes so too may its legal structure.
SCORE on the Island needs your help. If you are a retired or semi-retired business executive or nonprofit organization manager, consider becoming a counselor. If you don't have much free time but are able to provide resource expertise in the areas of law, accounting or technology and you could offer as little as ten hours of time annually, let us know. Please contact Susan at 508-696-1835 to get involved.
Seeking counseling service? Go to www.score.org and complete a brief application.
Susan Silk is a semi-retired communication consultant. Prior to moving to the Island full-time, she was the founder and president of a communication consulting and training firm in Chicago.