Individual Development Account Program

A Business Capitalization Plan For

______Name

To be submitted to:

______

Street

City State____ Zip

Phone ( )

E-Mail______

Connecticut Department of Labor Page 1 1/29/14 Statement of Purpose

Write a short statement describing why you want to start/expand your business.

______

Part One: Business Capitalization Purchase Plan

 What Kind of Business Do You Want to Start/Expand?  Do You Have the Necessary Skills?  The Pros and Cons of Business Ownership  Is Entrepreneurship For You?  Are You Ready to Change Your Lifestyle?  Plan for Income Uncertainty  Marketing Your Business  Readying Your Workplace  Start-Up Budget  Plan for Your Health Insurance  Save for Retirement  Other Things to Consider  Your Business Plan

Connecticut Department of Labor Page 2 1/29/14 Part Two: Supporting Documentation

 Approved Business Plan  Documentation showing business account opened at a bank  Proof of registration with municipality as a business or with the state as a corporation  Proof of receipt of a Tax ID number (if applicable)  Copy of business license (if applicable)  Application for business loan (if applicable)  Proof of receipt of business loan (if applicable)  Receipts for all purchases made with matching funds  Asset Purchase Request Form  Withdrawal Slip from the Participant’s IDA  Copy of check from the Participant’s IDA  Withdrawal Slip from the Local Reserve Fund  Copy of check from the Local Reserve Fund  Asset Purchase Sign-Off Sheet

NOTE: This Business Capitalization Purchase Plan does NOT take the place of an approved Business Plan, which is required before matching funds will be provided for a business asset.

Connecticut Department of Labor Page 3 1/29/14 Part One: Business Capitalization Plan

1. What Kind of Business Do You Want to Start/Expand?

Describe the kind of business you are interested in starting or expanding. What products or services will your business provide?

______

Connecticut Department of Labor Page 4 1/29/14 ______

______

Connecticut Department of Labor Page 5 1/29/14 2. Do You Have the Necessary Skills?

A. What professional, technical, mechanical or other skills will you need in your business (e.g., a day care facility, carpentry business, computer repair, etc.)? Are you confident that your skill level is high enough that you will be able to provide your customers with consistent professional-quality services/products?

Connecticut Department of Labor Page 6 1/29/14 B. Think about other skills that you will need to run your business (recordkeeping, marketing, bookkeeping). Do you have these skills? If not, how can you acquire them or get help from others who have these skills?

Connecticut Department of Labor Page 7 1/29/14 3. The Pros and Cons of Business Ownership

There can be many benefits to starting your own business, but there are drawbacks as well. In the excitement of thinking about the “pros” of starting a business, we might not look clearly enough at the “cons.” Take some time to think through the pluses and minuses of starting your business. For some ideas, go to: http://www.bizfilings.com/learn/starting-business-benefits.aspx

Pros: ______

______

Cons: ______

______

Connecticut Department of Labor Page 9 1/29/14 4. Is Entrepreneurship For You?

Owning your own business is very different from working for someone else. Following are some attributes that characterize a successful entrepreneur. How many describe you? How can you work to develop the qualities that are not your strengths, or link with someone who can assist in areas where you are not strong?

Independent:______

______

____Comfortable with taking risks:

______

___Persuasive:______

______

______Able to Negotiate:

______

Creative:______

______

Connecticut Department of Labor Page 11 1/29/14 5. Are You Ready to Change Your Lifestyle??

Being your own boss can mean a big change in lifestyle. Here are some things that might change for you: you will be on call 24/7; you will be working long hours; if you work at home you will have no commute but you will always be at “work”; your family will be impacted, especially if you have a home-based operation; your family will have to deal with the emotional and physical strain of your long working hours.

Think about how operating your own business will change your lifestyle. List the things that will change and how you will deal with them.

1. ______

2. ______

3. ______

Connecticut Department of Labor Page 12 1/29/14 6. Plan For Income Uncertainty

A big difference between being self-employed and being an employee is your source of income. As a new business owner, you will only get paid when and if the business generates a profit. It is unusually for businesses, even ones that are eventually very successful, to generate a profit in the beginning.

How will you support yourself and your family until your business becomes profitable? Some people continue at their regular job and work on their new business at night and weekends. Maybe your spouse’s salary will support the family for the time being. Will you need to live on a tighter budget? Will you be able to get a small business loan to support you temporarily?

What is your plan for dealing with income uncertainty?

______

Connecticut Department of Labor Page 14 1/29/14 7. Marketing Your Business

All businesses need customers/clients to be profitable! Customers need to know about your business so they can find you. Think about the following questions:

1. Who are your target audience – the group(s) of people most likely to use your product/service? (For example, if you plan to open a child day care, your target audience would include parents of young children.) ______

2. What message do you want to give to your target audience that will make them want to use your product/service? ______

3. What is the best way to deliver the message to your target audience? ______

Connecticut Department of Labor Page 15 1/29/14 8. Readying Your Workspace

Where will you operate your business? It is a business that you can operate out of your home? Will you have to rent an office? Will you have to rent warehouse or factory space?

There are pros and cons to both working at home or renting an office. This website may help you decide which is right for you and your business. Check it out and then write down the pros and cons for you of either working at home or renting an office. http://www.moneytalksnews.com/2012/04/05/work-from-home-or-rent-an-office-pros- and-cons/

Working at Home Renting an Office Pros Pros

______

Working at Home Renting an Office Cons Cons

______

Does working from home or renting an office make more sense for you, and why? ______

Connecticut Department of Labor Page 16 1/29/14 9. Start-Up Budget

Having a budget before you start your business is critical. Here is a suggested budget template that you can work with. You might not need all the line items, or there might be some that you have to add for your particular business.

One-Time Expenses:

Equipment $______Installation $______Start-Up Inventory $______Legal and other professional fees $______Licenses and Permits $______Seed Money (Cash on hand) $______Other $______

TOTAL ONE-TIME EXPENSES $______

Monthly Expenses:

Your salary $______Other employees’ salaries $______Rent $______Advertising/Marketing $______Supplies $______Phone $______Utilities $______Insurance $______Taxes $______Maintenance $______Legal and other professional fees $______Miscellaneous $______Other $______

TOTAL MONTHLY EXPENSES $______

Connecticut Department of Labor Page 17 1/29/14 Monthly Revenues:

Calculate the amount of revenue you will anticipate earning each month. Be realistic. You will probably be earning more at six months than at one month, and more at one year than at six months. These figures do NOT take into account your expenses.

At One Month

Number of items sold/services provided ______Cost per item/service $______Total monthly revenue $______

At Six Months

At One Year

Connecticut Department of Labor Page 18 1/29/14 10. Plan for Your Health Insurance

Although employees are being called upon to pay an increasing share of health insurance costs, it's tougher when you’re self-employed. Approach your health insurance coverage with the following in mind:

 There is no employer to pick up the premium cost, and no pool of employees that would allow you to negotiate a more favorable rate than you can get on an individual policy.  You may be able to join an association of other small businesses and take advantage of cheaper group insurance rates.  For those covered under employer-provided health care plans who leave to start a business, there's the option of coverage through your former employer's plan under the COBRA law. But there are many restrictions and coverage may be limited to as little as 18 months or as long as 36 months.  If your spouse has insurance through an employer plan, consider coverage through that plan.

Here are some websites that will provide you with information to help you make your decision about health care.

http://www.healthcare.gov/self-employment/coverage/

http://www.ct.gov/hix/site/default.asp

http://www.nase.org/NASE/RequestQuote.aspx

What is your plan for providing health insurance for yourself and your family? ______

11. Save for retirement

Connecticut Department of Labor Page 19 1/29/14 When you’re starting a business, there’s no shortage of demands for your money. But saving for retirement is critical, although people tend to down play the risk because "retirement is such a long way off." Be aware of the following as you consider your retirement plans:

• A small business owner has to make a conscious decision to save, outside the framework of a plan administered by someone else. • The choice to save can often can be deferred or forgotten when cash needs to be put right back into the business. • Transitioning to work for yourself is an exciting, as well as anxiety-provoking, time. Be realistic about what you can commit both financially and time-wise, and don’t forget to plan for the future. It is the best gift you can give yourself!

Make a commitment to start saving for retirement. Try saving even a small amount at first and then increasing it as your business grows. An accountant can help you choose the best retirement savings plan for you. Here are some websites to give you some ideas:

http://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people

http://money.cnn.com/retirement/guide/selfemployment_basics.moneymag/index. htm

http://money.howstuffworks.com/personal-finance/retirement-planning/10- retirement-planning-tips-self-employed.htm

What is your plan for saving for retirement? ______

Connecticut Department of Labor Page 20 1/29/14 12. Other Things to Consider

There are many things to consider when starting your business. It may seem overwhelming, but there is a great deal of information and support available to you. Here are some issues to consider along with links to direct you to websites where you can get more information. Not all of these topics might apply to your business.

Choosing the Correct Structure for Your Business: http://www.ct-clic.com/content/glossary_of_business_terms.asp

Business Tax Filings (Federal): http://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Filing-and-Paying- Your-Business-Taxes

Business Tax Filings (Connecticut): http://www.ct.gov/drs/cwp/view.asp?a=1454&q=506012#4

Do You Need to Get a State License for Your Business?: http://www.ct-clic.com/Content/Licenses.asp

Sales and Use Tax Permit: http://www.ct.gov/drs/cwp/view.asp?a=1477&q=269928

Business Insurance: http://www.ct-clic.com/content/business_insurance.asp

Recordkeeping: http://www.bizfilings.com/toolkit/sbg/finance/bookkeeping/basic-bookkeeping-working- with-accountants.aspx

Connecticut Department of Labor Page 21 1/29/14 13. Your Business Plan

An approved Business Plan is required for anyone starting or expanding a business through the IDA program. Your IDA Case Manager will direct you to resources that will help you develop your plan. You might want to look at this website (http://www.entrepreneur.com/businessplan/index.html) so you know what goes into developing a Business Plan. Your Plan must be approved by a certified Microenterprise Program or by your financial institution.

But you are well on your way to developing your Business Plan! The questions you have answered in this workbook and the research you have done have helped you think through many of the issues that will also be included in your Business Plan and will make the task of writing your Business Plan much easier.

Good luck in your business!!!

Connecticut Department of Labor Page 22 1/29/14 Part Two: Supporting Documents

Attach copies of the following documents:

 Approved Business Plan  Documentation Showing Business Account Opened at a Bank  Proof of Registration with Municipality as a Business or with the State as a Corporation  Proof of Receipt of a Tax ID Number (if applicable)  Copy of Business License (if applicable)  Application for Business Loan (if applicable)  Proof of Receipt of Business Loan (if applicable)  Receipts for all Purchases Made With Matching Funds  Asset Purchase Request Form  Withdrawal Slip from the Participant’s IDA  Copy of Check from the Participant’s IDA  Withdrawal Slip form the Local Reserve Fund  Copy of Check from the Local Reserve Fund  Asset Purchase Sign-Off Sheet

Connecticut Department of Labor Page 23 1/29/14