Small Business Development Center
At Chemeketa Center for Business & Industry
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Category Archives: Start-up

Financing Your New Business

By Chemeketa SBDC

Obtaining a loan for an existing business can sometimes be very difficult. It is even more difficult for a new startup company. It is, however, usually possible to do so if the owner or prospective owner is willing to follow some basic steps.

The prospective borrower should realize that small business loans are considered high risk for a bank. Lending institutions, therefore, almost always require the pledging of personal property by the owner as collateral.

The first step to obtaining a loan is the creation of a loan proposal which consists principally of a business plan. The loan proposal must be a selling document with its main purpose to give the prospective lender confidence that the business is or will become financially successful. To be successful a business must be profitable, have positive cash flow, provide an adequate return on investment, show a strong balance sheet, and perhaps most importantly have longevity and value beyond the present owner.

The loan proposal should first state how much money is being sought and how it will use the funds. If equipment is to be purchased, specific quotes from the manufacturer or supplier of the equipment should be included. Enough working capital should be requested to ensure that the business will have enough cash to operate successfully. It is important to show how the loan will be repaid so a cash flow projection for at least the next three years must be included. Of particular interest to the lender is the balance sheet which must show all the assets of a business balanced against its liabilities and owner’s equity. Most lending institutions want to see an owner’s equity of at least 20 to 30 percent.

A description of the owner’s background experience in the field, the owner’s personal financial statement, and copies of personal tax returns for at least the last three years should be included.

All of the above should be neatly packaged and presented to the lending establishment. Business loans, when granted, are normally for no longer than five years and interest rates are usually higher than loans for non-business purposes such as the purchase of a new car or truck.


Consider Starting Business Using ‘Boot-Strap’ Method

By Chemeketa SBDC

In this current economic climate starting a business using the “bootstrap” method minimizes your personal financial risk to outside sources. Bootstrapping is a means of financing a start-up business through creative acquisition and use of resources without raising equity from traditional sources or borrowing money from a bank. In short, “bootstrapping” means starting a new business without start-up capital; it is a self-sustaining process that proceeds on its own.

Objectively evaluating your current financial position will help you determine how to proceed with your business idea. Many people will need to get some financial management training and work on clearing out unnecessary debt before launching their business. Others will benefit from dedicating themselves to becoming frugal minimalists by scrutinizing expenditures. Building this foundation for yourself will help you establish a core value for your business success.

There are lots of ways to get a business up and running while staying within your financial parameters. Here are a few.

•  Start your business out of your home. Rent is one of the biggest expenses for any business. If you can, start your business in your home office, basement, or garage.

•  Start with what you have. Use what you have around the house first. Consider borrowing from a friend, renting or buying used equipment when you can.

•  Learn to barter. Barter everything you possibly can. Think outside the box —trade services with other entrepreneurs

•  Start small. You don’t need a huge start-up marketing campaign. Start small and ever-so-slowly work your way up. Keep in mind that a moderate expenditure for an established business can be an outrageous one for a start-up.

•  Be creative. One of the keys to keeping start-up costs low is to find affordable and creative ways of doing what you need to get done, rather than just spending cash to hire someone else. Save money by making your own fliers and business cards, instead of getting them professionally designed and printed.

How you maintain your personal finances is a good indicator as to how you will manage your business finances. A good place to start is to develop a good cash flow budget. This is a goal setting tool to help you see the flow of income and expenses over a period of time. It is an estimate of cash coming in and cash flowing out. Monitoring when and how money comes in, and where it goes on what dates, will allow you to save for upcoming months when money may not be as plentiful. Knowing this will help you determine when to purchase equipment and other needed supplies thus keeping you in the black.

Cash flow should be the first priority for every business, so begin this practice in your personal finances to get a feel for doing it in your business. There are many resources available to help you understand this process and effectively implement it in your personal finances.

This link will give you a cash flow worksheet:

For a good explanation of cash flow try:

Mona Edwards is a program coordinator working with the MERIT Microenterprise Program at the Chemeketa Small Business Development Center.

SBDC client in the news! A new twist on delivery

By Chemeketa SBDC

Casablanca Meal Delivery Services’ business is based on a simple model: provide fresh, healthy meals delivered to customers homes.

The Salem company takes a burden off clients, such as Joy Tuff and her husband, Richard. Shopping and cooking can be difficult for the Tuffs, who are in their 80s and require special diets for medical reasons.

“It’s really hard to cook the things that both of us can have,” Joy Tuff said.

The meal delivery service, which has been in business for a year, charges its clients monthly fees. For one senior, a subscription for Monday through Saturday dinners is about $240 a month.

For the Tuffs, the expense is worth it. They get appetizing meals, served on a white china plates, that follow doctor’s orders.

Casablanca Meal Delivery began out of necessity. Company founder Crystal Gonzalez, a mother of five, had lost her job, and the outlook was bleak. The family had little money and was living at a relative’s house.

“I knew that if there wasn’t a job out there I could get, I needed to create a job for myself,” Gonzalez said.

Gonzalez, 32, had never run a business before. She hadn’t done well in school and had overcome a drug addiction. But she was certain of a couple things: her insurance industry background taught her about customer service; and she knew how to cook.

First stop on Gonzalez’s path to becoming an entrepreneur was the MERIT program, part of the Chemeketa Center for Business and Industry in Salem. The program provides training to help turn ideas into new businesses.

After devising a business plan, Gonzalez obtained a small loan to launch Casablanca Meal Delivery.

It quickly became apparent that delivering hot meals wasn’t the way to go. From a practical and food-safety standpoint, it’s easier to deliver chilled, prepared foods that customers can re-heat at their convenience.

Entrees, such as apple-stuffed pork chops and Parmesan tilapia, are delivered to customers up to three times a week. Two meals, with side dishes, are delivered at a time. If customers are away from home, meals can be placed in a cooler outside.

“What I wanted was a service to make people feel as if the meals were prepared in their homes,” Gonzalez said.

Meals are made from fresh ingredients in the kitchen at the Broadway Cafe in Keizer, a space Gonzalez subleases. The company has retained a dietician to design its menu, although Gonzalez and a relative do the day-to-day work of running the company.

For now, the small company has focused on serving the Salem-Keizer area.

After one year in business, Casablanca  has more than 20 monthly subscribers. It’s too early to declare the company a financial success, but it has a built a loyal clientele among seniors.

“It just made it easier by not having to fret and worry about getting to a grocery store,” said Diane Colbath, a Keizer senior who signed up for the delivery services after her husband, Ben, was put on a low-sodium diet.

“This is what I wanted—good food, healthy food,” said Helga Hillig, an octogenerian who lives at the Salemtowne adult community in West Salem. She doesn’t drive and uses a walking cane.

The over-65 crowd, however, isn’t the company’s only customers.

Casablanca Meal Delivery offers postpartum and post-operative meal services. It also markets its services to busy families and singles.

In some respects, operating a food delivery service is even more problematic than running a standard restaurant. Delivery costs, such as labor and $4 a gallon gasoline, have to be taken into account.

“You have to do a lot of volume to make up for the expense of delivery,” said Bill Perry, a vice president with the Oregon Restaurant and Lodging Association.

Offering prepared meals-to-go certainly isn’t a new idea. Grocery stores long ago picked on the idea that consumers wanted a “home-cooked” meal and expanded their deli sections. Delivering meals to customers who pay monthly subscription fees seems like a natural progression of that trend, Perry said.

Casablanca recently has found money in its shoestring budget to purchase newspaper and radio advertising. Word-of-mouth advertising might be its best marketing tool, as its senior customers tell their friends about the service.

“They want me to stick around,” Gonzalez said. When she visits customers in their homes, they rarely allow her to leave without a hug., (503) 399-6657 or follow on Twitter at mrose_SJ

Think Before Buying a Business

By Chemeketa SBDC

Have you been considering buying a business recently? Perhaps someone you know is selling theirs and you would like to try your hand at running it? There are several important considerations before you jump on the opportunity. Think them through and make an informed decision before proceeding.

First, what is your experience and background in running a small business and in this particular industry? If you have never owned a business before it is very helpful to look for one in your particular field of expertise. And, generally, a bank would never consider loaning you money for a business in which you have no experience.

Next, look at the business itself. Why is it for sale? If it is as great as the seller claims it to be, why sell? Why not hire a manager, keep it in the family, or even lease it out? The reasons are rarely simple. The sale requires more research than just the seller’s explanation. There will be both personal and professional reasons. You job is to understand and to make your risk decisions accordingly.

What are you actually buying? How does the price tag spread across the assets of the business? What is the condition of the equipment? What is the true replacement value of the furniture, fixtures and equipment? What would you need to pay for similar assets on the used market? What assets are not staying with the business? Are any of these departing assets critical to success of the business?

Make certain that you are not (unintentionally) buying the business debt. At times the owner will sell accounts receivables along with the accounts payables. How old are these receivables? Are any actual bad debts that you can never collect? How old are the accounts payables? Has the business not paid their suppliers and therefore are on cash on delivery? Check the amounts and ages of the accounts receivables and payables — even it you are not “buying” them.

Look at the financial statements and summaries for trends in income. Does this business have the ability to keep its current market share and remain competitive? What will keep the customer-base coming back? Can they be easily lured away by your competitors? How many existing customers will the business actually lose with a change in ownership?

How much additional money must be invested in the business in order to make the changes you think are necessary?

This business may be running profitably now and yet still not be able to sustain the debt load (bank loan) if you have to borrow money to purchase and run the business.

The last three to five years of financial statements and tax returns (ask to see both!) can be an indicator of whether the business has been well run.

If you are told that the financial statements don’t really reflect the true value of the business — that, in fact, much of the profit is “hidden” — walk away.

To Succeed in Business, Know the Risks

By Chemeketa SBDC

To succeed in business, know the risks

You’ve heard the statistics on business failures and how difficult it is for new businesses to survive. According to the U.S. Small Business Administration, 30 percent of new start-ups won’t last the first two years, and by the five-year mark, one-half of all new businesses will be gone.

Why does this happen? And more importantly, how can you prevent this from happening to you? Here are some very common reasons for new business failure.

- Starting up in industries where others are shutting down. Obviously you aren’t launching a business selling typewriters or rotary phones. But many industries are experiencing radical downturns such as the music industry, book stores, printing businesses and many others. You don’t want to be on the back end of changes in consumer demand, technology and other market forces.

- Not paying attention to your numbers. This can include neglect of your books, inattention to what your bookkeeper is doing, going ahead with something without testing assumptions, taking wild guesses about whether there’s demand out there or not.

- Setting prices that are entirely too low. It’s impossible to be the low-cost leader without economies of scale. Don’t play this game! Walmart and other discount stores will eat you up.

- Running a mediocre business to begin with. Customers will not return to a business that treats them poorly, has shoddy merchandise, and is altogether not worth patronizing. If you’re working harder and harder to attract new customers while not having any repeat customers, there’s probably a good reason.

- Underestimating costs. You can easily spend your way right out of business by paying too much for labor, materials and/or overhead. This puts you in a bad position with cash flow, and will doom your operation.

- Growing too rapidly. Sadly, a business that grows too fast is often one growing in haphazard ways, is chronically short of cash, and doesn’t have time to train new employees sufficiently nor implement sane systems. It’s like a car at top speed that will spin out of control and crash.

- Not having an adequate cash cushion. Seasonality, business cycles, unexpected events, huge orders, and economic trends all lead to an unevenness in cash flow. You need a cushion (that you’ve built up in the good times) to help you get through the lean times.

- Having dysfunctional management. This opens a Pandora’s box of misery, turnover, conflict, and unhappiness. Don’t let this happen to you! Pay careful attention to the dynamics of leadership in your business, solicit feedback on a regular basis, and seek help if you’re the one with the problems.

- Not bothering to do any planning. Winging it is a poor strategy, to say the least. Make sure to spend enough time thinking about where the business is going, and what happens along the way. This includes contingency planning for the inevitable sidetracks that life will put you on.

Marcia Bagnall is Director of the Chemeketa Small Business Development Center and instructor of Small Business Management Program . The Small-Business Adviser column is produced by the center and appears each Sunday. Questions can be submitted to Visit the SBDC at 626 High Street NE in downtown Salem or call (503) 399-5088.

Start Your Business and Inicie Su Negocio

By Chemeketa SBDC

Start Your Business

A shorter, 1-hour version of the Entrepreneurs 101 Series, but just as useful for pre-startup businesses. Held on the second Thursday of each month at the following locations and times:

Dallas (580 Main Street, Suite B – map)  12 noon – 1 pm
McMinnville (310 NE Norton Lane – map)  2 – 3 pm
Grande Ronde (Education Center) 10-11 am
Salem (605 Cottage Street NE- map) 9-10 am en Español 10-11 am
Woodburn (120 E Lincoln Street – map) 12-1 pm en Español 1-2 pm

Cost: FREE
Registration and Information: 503.399.5088

Inicie Su Negocio

Este taller dura una hora y presenta la información esencial que se necesita para tomar el próximo paso en desarrollar su concepto de negocio.

Cada segundo jueves del mes

Chemeketa Center for Business and Industry (626 High Street  NE, Downtown Salem) 9-10 am
WorkSource Center Salem (605 Cottage Street NE- map) 10-11 am
WorkSource Center Woodburn (120 E Lincoln Street – map)  1-2 pm

Inscripción y Información: 503.399.5088

Entrepreneurship 101 Series

By Chemeketa SBDC

Entrepreneurship 101 Series

Developing your business idea and need more information on how to start? You’re not alone! This series covers all the essential information you need to make an informed decision about moving forward with your business idea.

1st Tuesday
Self-Employment — Am I cut out for the life of an entrepreneur?
We’ll explore what it’s really like to be self-employed and how to know your weak spots to ensure your business’ success.

Economic Feasibility – How do I know my idea will fly?
Most business owners are confident their idea will work, but don’t know why. This class will give you more certainty.

2nd Tuesday
Rules and Regulations – How to keep the government happy.

With business comes oversight. Learn where to find out what rules and regulations apply to your business idea and keep yourself out of trouble.

Financing & Loans — How do I fund my start-up?
There’s a lot of misinformation about grants and loans out there. Come get the complete scoop so you can plan your start up finances with confidence.

Comments from past participants:

  • “This class has helped answer many of my questions about going into business.”
  • “Joanne is very informative, if she does not have an answer, she guides you to where you may find it. Really great person and professional.”
  • “It gave me a clear direction for starting my business and provided me with relevant resources to achieve my business goals.”

Time: 12:30 - 2:30 pm
Instructor: Joanne Scharer
Location: Chemeketa Center for Business & Industry, 626 High Street NE, Downtown Salem
Cost: FREE
Registration and Information: 503.399.5088

Another SBDC Client Celebrates Grand Opening!

By Chemeketa SBDC

The Dog Bark will celebrate is grand opening this Friday, February 25.

When: 7:00 am – 6:30 pm
Where: 1290 Hoyt St SE Salem, OR 97302

Don’t miss out on a live broadcast w/ KYKN 1430 am, hilarious contests, pet portraits, great prizes, a raffle, free wine, and free appetizers for both you and your dog!

Make an evaluation reservation or bring a friend who does so, and receive a free day of daycare ($24 value) OR a free night of boarding ($30 value).

Schedule of Events:

Appetizers (for our furry friends as well) all day longCompliments of Coffee Shots

Buy your tickets for the raffle (Benefits Willamette Humane Society) all day long. Win great prizes from South Salem Pet Supply, Natures Pet Market, and My Dog’s Gym.

-(10:30 am) Chamber of Commerce ribbon-cutting ceremony
-(11:30 am) Canine Beauty Contest – Dress your furry friend up in his or her finest; the winner receives 1 free day of daycare!
 -(1:00 pm)The Roll over Contest – Bring your pooch in to show off his or her coolest trick; the winner receive a free night of boarding!
-(2:30 pm)Down n Dirty Foot-Race Contest - The fastest daycare dog wins this one…we will have 5 outdoor foot races and the dog who wins the most out of 5 races will win a free premium bath!
-(3:00 pm – 6:30 pm) Clipfell photography will be shooting amazing pet portraits!
-(3:00 pm – 5:00 pm) 1430 KYKN live broadcast
-(3:00pm – 6:30pm)We will be pouring Ankeny Vineyard Hershey’s Pinot Noir
-(6:00 pm) Raffle drawing (benefiting the Humane Society) with great prizes from South Salem Pet Supply, My Dog’s Gym and Nature’s Pet Market .

For more information, call  503.883.1452

Do You Make Handcrafted Goods for Sale? Do You Want to Expand Your Market?

By Chemeketa SBDC

If so, the ever expanding global marketplace has carved out a space for you.  Online handmade goods websites with options for marketing and selling your wares are becoming more popular and more user friendly.  Sites like ETSY, Artfire, and 1000 Markets (U.S. made only), make it easier for you to reach more potential customers and create connections with other crafty business owners.

SBDC client, Theresa Douglas, started her business UptownAvenue in June 2009 and has been using ETSY as a way to build business.  “It’s wonderful,” Douglas said.  “It’s easy to use and easy to communicate with customers.”

Because ETSY has a built in customer base and name recognition, it’s a good option for people just getting started or wanting to expand.  Still, even with ETSY’s popularity, users have to know how to market themselves.  “People need to get involved on the forums (on ETSY),” Douglas noted.  “It can be hard to get noticed.”  Douglas and her daughter are learning the ropes and have found ETSY to be a good way to build business.  “You can be as busy as you want to be (on ETSY),” Douglas explained.  “The toughest part is figuring out the shipping.  Getting a good postal guide will help.”

Check out Uptown Avenue’s ETSY sites at and

For information on other online handmade goods sites, see the article 10 Great Websites to Buy Handmade Goods.

SBDC Client in the News

By Chemeketa SBDC

We love seeing our clients in the news!  SBDC client, Vivian Zagar, and her yarn store,   Tangled Purls, was recently interviewed by The Oregonian. Click here to read the story.