Entrepreneurship 101

Small businesses are a big deal. They drive economic growth and innovation while providing plentiful and stable employment opportunities. And small food businesses ensure that safe, healthy food is grown, processed, and distributed to our community.

But being an entrepreneur isn't for everyone! You'll want to make sure you're ready for all the hard work it's going to take to plan, launch, and manage a business while understanding the risks and rewards. According to the Small Business Administration (SBA) 30% of new businesses fail during the first two years of being open. So, it’s critical to understand both the challenges and opportunities!

It's important to understand your own motivations and abilities.

This will help you think clearly about whether you’re ready to be an entrepreneur right now and what strengths and weaknesses you might need to keep in mind. Here are a few questions to ask yourself:

Why do I want to start a business?
What skills and strengths do I have that would help my business?
What weaknesses do I have that may negatively impact my business? How can I improve these weaknesses?
How many hours per day or per week do I have to dedicate to my business?
Do I have a sustainable source of funding to start and run a business?

There are also no-cost assessments you can use to help you decide if you’re ready to be an entrepreneur:

Additionally, you may want to conduct some research to make sure there is a market for your business idea. This will save you from potential frustration in the future. The SBA provides a guide on market research that can help identify who your customers will be so you can figure out how to give your business a competitive advantage

The Small Business Development Center (SBDC) compiled the list below of the most frequently asked questions they hear from entrepreneurs and small business owners. If you need additional assistance to help you with any of these questions or any other challenges with your business you can schedule a no-cost business advising phone appointment with SBDC to help determine your next steps.

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Frequently Asked Questions for Entrepreneurs

Q: How do I get a business license in Ohio?

A: In almost all cases, the State of Ohio requires businesses to register with the Ohio Secretary of State’s office. This registration is often referred to as a business license. You may also be required to apply for a specific license or permit to operate a food business in Ohio. To learn more, go to business.ohio.gov/starting and click on the drop-down menu under “Checklists.” For additional information please refer to the Following the Law page on the portal.

Q: How much does it cost to start a business?

A: The cost of starting a business depends on the type of business. For example, providing a consulting service from a home office will likely have a much lower startup cost than a full-service restaurant. It is important to calculate your startup costs so you can estimate profits, conduct a breakeven analysis, and secure loans. The Small Business Administration - Calculate Your Startup Costs resource may help you calculate your own startup costs. For additional information please refer to the Financing a Business page on the portal.

Q: What is a business plan? Do I need one?

A: One of the first steps in starting a business is developing a business plan. A business plan defines what a company must accomplish, acquire, and learn before it gets started. A business plan also can be used as a tool to access capital as it provides information to bankers and future employees about a company’s goals and organizational structure. The Small Business Administration - Write Your Business Plan resource offers an overview of business planning and can help you get started on your own business plan. For additional information please refer to the Business Planning 101 page on the portal.

Q: How do I get a grant/SBA loan to start a business?

A: Grants are generally awarded to nonprofit businesses for the purpose of providing a public service, and are typically tied to specific services and outcomes. Pursuing a grant requires an application, which is filed with the business or agency that will be awarding the grant. More information on federal grants can be found on the Grants.gov Grants 101 website. The SBA does not issue loans. Rather, SBA-guaranteed loans are issued by traditional lenders, such as banks and micro-lenders and are guaranteed by the SBA. SBA-guaranteed loans reduce the risk for the lender, making it easier for a small business to access capital. For more information on SBA-guaranteed loans, visit the SBA Funding Programs website. For additional information please refer to the Financing a Business page on the portal.

Q: How do I know which business structure to select?

A: The business structure you select will affect your personal liability, how you are taxed, how the business operates, and your ability to raise capital. It is highly recommended that you understand your options before you make a decision on a business structure - what works for one business may not work for another! The Small Business Administration - Choose Business Structure website provides an overview of business structure options and guidance for making a decision. For additional information please refer to the Business Registration & Taxes page on the portal.

Q: Do I own a business if I have registered it with the Ohio Secretary of State?

A: Registering a business with the Ohio Secretary of State does not prove ownership. Rather, registering a business with the Ohio Secretary of State establishes the right to use a specific name for your business, provides contact information for representatives of that business, and prevents others from using the same name. Typically, proof of ownership is demonstrated through an executed operating or partnership agreement, proof of stock ownership, tax returns, and other documents, depending on the legal business structure.

Q: I registered a business with the Ohio Secretary of State. What do I do next?

A: Your next step after registering your business with the Ohio Secretary of State is to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). If you will have employees, you will also need to register those employees with Ohio Department of Job and Family Services, the Ohio Department of Taxation, and obtain workers’ compensation coverage. For additional information please refer to the Business Registration & Taxes page and the Following the Law page on the portal.

Q: Do I need to collect sales tax? If so, what do I do with it?

A: Ohio law requires any person or business making retail sales of tangible personal property or taxable services to register for the sales tax by obtaining a vendor’s license. The vendor’s license is the mechanism that allows you to collect sales and use taxes from your customers and to remit those sales and use taxes to the Ohio Department of Taxation. To purchase your vendor’s license, you can download the forms from the Ohio Department of Taxation website. Alternatively, you can apply at your local county auditor’s office or on the Ohio Business Gateway. For additional information please refer to the Business Registration & Taxes page on the portal.

Q: What insurance do I need for my business?

A: Workers’ compensation insurance is generally required for Ohio businesses with one or more employees. You should also consider insuring your business and its assets, as well as obtaining liability coverage in case of any claims involving bodily injury or property damage. It is highly recommended that you talk with an attorney or insurance agent to ensure that every aspect of your business is covered. For additional information please refer to the Professional Services page on the portal.

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Entrepreneurship 101