Congratulations! You have decided that owning a business in Colonial Beach is the right thing for you. But where to start? No worries…this section contains a step-by-step guide for how to fulfill your dream of becoming your own boss and working where you play!
Develop a Business Plan
Your Business Plan is a blueprint that describes and analyzes your business and provides projections for the future. The process forces you to focus your thoughts in a systematic, organized way and business plans are usually required to get financing. Business plans provide milestones and metrics to measure your business over time. Based on the product/service you intend to offer in Colonial Beach, the first thing in creating a business plan is to develop a checklist of things you will need to prepare it.
What's in a Business Plan?
Provide a thorough description of your business, explaining the type of business it is, it’s ownership and legal structure, the skills and experience you bring, the products and/or services you will provide, and the advantages your business will have over competitors.
Marketing and Market Analysis
Identify the demand for your product/service in Colonial Beach, identify the size of the market, explain the seasonality of your product/service, identify customers and their locations, identify competitors and their locations, and detail how you will advertise and deliver your product/service.
Identify the owner(s) and key employees and the skills that each bring to the business, identify your professional advisors, and define your organizational structure.
Describe the production of your product/service, explain your choice in site, building and equipment, identify needed personnel and job descriptions, explain pricing and selling strategies, provide an analysis of profit margin requirement, provide written policies and procedures, identify suppliers and distribution process as applicable.
Explain the source and amount of needed initial capital and describe start-up costs and budget, identify monthly operating expenses and projected revenue, provide Pro Forma statements for your business, develop a monthly income statement for the first year, provide 1-2 years of monthly projected cash flow and income, provide 3 years of projected annual cash flow and income, 3 years of year-end balance sheet statements, identify your break-even point, include your current credit report and provide past 3 years of personal tax returns.
Determine Legal Structure
To begin any type of new business, you must first decide how you want the business structured. The decision on how to structure a business varies for each owner. It is highly recommended that you consult an attorney or an accountant to determine the best structure for your business. Also, www.bos.virgnina.gov is an online service provided by the State of Virginia to help accelerate the formation process for new businesses.
What are the Most Common Business Classifications?
A sole proprietorship is an unincorporated business that is owned and operated by one person. This person receives all the profits and is personally liable for all the losses.
A general partnership is a relationship existing between two or more persons who join together to carry on a trade or business. Each partner contributes money, property, labor and/or skills, and agrees to share in the profits or losses of the business. General Partnerships complete a Statement of Partnership Authority and file it with the State Corporation Commission. If there is a Statement that has been filed in an office in another state, a duly authenticated copy may be filed with the Commission. The filing fee is $25.
Generally, a limited partnership is created to obtain additional funds. General partners retain control over the management of the partnership and are liable for all debts. Limited partners invest money or property in the business and are entitled to share in the profits but are not liable for debts beyond their investment. Limited Partnerships (domestic) must file a Certificate of Limited Partnership with the State Corporation Commission and pay a $100 filing fee. A limited partnership created under the laws of another state or country is called a foreign limited partnership. An Application for Registration of Foreign Limited Partnership must be completed and registered with the State Corporation Commission before business is transacted in Virginia. The filing fee is $100.
Limited Liability Partnership
A limited liability partnership is a special status that can be registered under a general partnership or a limited partnership. Partners are not individually liable for claims and debts of the partnership as a whole or any other individual partner or employee. However, a partner is still liable for claims and debts as a result of his/her own actions. A limited liability partnership must carry a minimum $500,000 in liability insurance. The filing fee is $100 and the annual registration fee is $50.
Limited Liability Company
A limited liability company is a business entity that is an unincorporated firm of one or more members who own membership interests on their capital contributions. This type of business is intended to be taxed as a partnership while limiting the personal liability of its owners.
A Limited Liability Company must file:
- Articles of Organization (if domestic)
- Articles of Organization for a Professional Limited Liability (if professional)
- Application for Registration of a Foreign Limited Liability (if foreign) with the State Corporation Commission and pay a filing fee of $100. The annual registration fee is $50.
A corporation is an entity with a legal existence apart from its owners. Corporations must comply both with federal and state laws where business is conducted. Corporations are classified as stock or non-stock and domestic or foreign. Every corporation must first register with the State Corporation Commission before beginning its operations in Virginia. A Subchapter S (or “S”) Corporation is a special form of a regular corporation. It is incorporated as a regular corporation but asks for special permission from the Internal Revenue Service to be taxed as a partnership. A new business incorporating in Virginia must file its Articles of Incorporation with the State Corporation Commission and pay a filing fee of $25. Stock corporations must pay a charter fee based on the number of authorized shares. The charter fee is $50 for every 25,000 shares or fractions. For over one million shares, the fee is $2,500. Non-stock corporations (those organized not for profit) pay a charter registration fee of $25. Foreign corporations are corporations doing business in Virginia but incorporated elsewhere. To transact business or conduct affairs in Virginia, a foreign corporation must apply for a “Certificate of Authority to Transact Business in Virginia” from the State Corporation Commission. The fees are the same as for domestic corporations (above). All corporations doing business in Virginia must register annually with the State Corporation commission and pay a fee. Stock corporations pay a $50 fee for 5,000 or fewer shares. They must also pay $15 for each additional 5,000 or fewer shares for a maximum fee of $850. Non-stock corporations pay an annual fee of $25.
Register Your Business
The process is of registering your business is different depending on the type and size of the operation you’re starting. We’ll explain the basics of how to get your business registered but please know that this information is not a substitute for advice from a small-business consultant.
What/Where/How to Register?
Register your trade name
A trade name is the use of any name other than your own for business purposes. All businesses in Colonial Beach that use trade names and all general partnerships must register with the Clerk of the Circuit Court in Montross before they can transact business in Colonial Beach.
175 Polk Street
Montross, VA 22520
(804) 493-0108, Fax (804) 493-0393
In addition to registering with the Clerk’s Office, you may need to contact one or more divisions of the State Corporation Commission.
P.O. Box 1197
Richmond, VA 23218-1197
Phone (804) 371-9733, Fax (804) 371-9918
Division of Securities & Retail Franchising
1300 East Main Street
Richmond, VA 23219
Phone (804) 371-9051, Fax (804) 371-9911
Register a Franchise
Franchises must also be registered with the Division of Securities & Retail Franchising of the State Corporation Commission before they may be offered or sold in Virginia.
Trademarks owned or used in Virginia may be registered by filing an application and a filing fee of $30 with the Division of Securities & Retail Franchising of the State Corporation Commission.
Obtain Employer Identification Number (EIN)
An Employer Identification Number (EIN) is also known as a federal tax identification number and is used to identify a business entity. Generally, all businesses need an EIN. You may apply for an EIN online from the IRS at www.IRS.gov. If you apply online, you will receive your EIN immediately.
Obtain a Virginia State Tax ID
Retail businesses (including those serving meals) will need to register with the VA Department of Taxation for the purpose of paying monthly retail sales tax. Go to www.tax.virginia.gov for more information.
Decide How You Will Finance your Business
Lack of capital and inadequate record-keeping are major causes of business failure. You must not only know how much money you need to start the business, but how much working capital will be needed to carry you through the first months of operation.
Every day, bankers see people who want a business loan for the “opportunity of a lifetime” that “just can’t fail.” These want-to-be entrepreneurs usually attempt to explain their notion orally and have not done the necessary research to determine the feasibility of the idea. In order to be taken seriously, it is imperative to write a formal business plan. When a banker analyzes a business loan application he/she looks at the “eight C’s of lending:”
- Credit – It must be good, not necessarily perfect
- Collateral – Something of value to secure the loan
- Cash Flow – Ability of the business to repay the loan from operations
- Capacity – Your personal ability to repay
- Capital – Your cash investment or down payment
- Character – Yours!
- Conditions – Anything that can affect your business (industry, economy, etc.)
- Commitment – Your will to succeed
Each of these areas items must be addressed in the business plan. If you walk into the banker’s office with a plan in hand, you have made the first step in separating yourself from the pack.
How Can I Fund My Business?
Facts About Small Business Loans
You will need good credit. If there are any problems on the report that can be remedied before meeting with a banker, do so. A lender may be able to make exceptions if you can document that a negative report was due to circumstances beyond your control. Include a detailed written explanation with supporting information in your financing proposal. However, if the report shows that you are irresponsible, and you have not demonstrated a willingness to repay obligations, the lender will be unable to make a loan. There is no such thing as 100% financing. You are going to have to put some money into the business and the more you do, the better chance you will receive loan approval. A bank will require you to personally guarantee the loan even if you are incorporated. There is no way to avoid putting personal collateral at risk. If necessary, this could include your house. Some businesses are easier to finance than others. Since over 60% of all small business start-ups fail within 5 years, lenders know that the odds are against a new business being around long enough to repay a loan. An existing business is easier to finance if profits are sufficient to repay the loan. Also, many sellers are willing to hold some of the financing. Franchises are generally easier to finance than independent start-up businesses. The process is not quick. If you must have the money to open by a certain date, make your loan application as far in advance as possible. The Small Business Administration (SBA) does not lend money. The SBA does have guaranty programs that are designed to provide more security to lenders so that they will have an incentive to lend money to small ventures which would be too risky for a conventional bank loan. SBA guaranteed loans are made and processed by a bank, with the SBA guaranteeing up to 80 percent of the loan. Interest rates and repayment terms are negotiated between you and the lending institution. SBA does limit the interest rate the lender can charge and there is a small guaranty fee. Contact the SBA or the Small Business Development Center in Warsaw for more information.
Types of Capital
Start-up capital is the money you need to spend before the business opens. The amount varies widely depending on the type of business. Some examples include:
- Seed money – research and planning (usually for high-tech businesses)
- Security deposits for a lease, utilities, etc.
- Construction, renovations, signs
- Equipment, tools, office equipment, etc.
- Labor – hiring and training staff before opening
- Legal and accounting fees
Working capital is the money needed for day-to-day business expenses. You must have enough working capital available to pay all your bills until the business becomes cash flow positive and can support itself. This can take from several months to several years. After you complete your pro forma monthly cash flow projections you will have a very good estimate of the amount of working capital you will need. Allow extra for unexpected things. If you have just enough money to get started but not enough to properly operate the business, you may be doomed from the start.
Types of Financing
Debt financing does not give the lender ownership control, but the principal must be repaid with interest. Length of the loan, interest rates, security and other terms depend on the loan’s purpose.
Commercial Bank Loans
- Short-term – Loans for short periods (30 – 270 days) usually made to cover temporary or seasonal needs for inventory or personnel. These are common for established businesses but may be difficult for a new business to obtain.
- Medium to long term – These loans may be repaid over anywhere from 1 to 10 years depending upon the collateral and how the proceeds are used. The source of repayment is the cash flow of the business. Typical uses are for equipment, fixed assets, etc. Most loans to start a small business will be of this type.
Real Estate Financing
Real estate is typically financed over a fairly long term, 10 to 30 years. Expect a down payment of about 20%. Equity in your personal residence or rental properties may qualify as collateral for a commercial term loan.
Accounts Receivable Financing
Money loaned against accounts receivable pledged as collateral.
Equity is money put into a business by the owner, private investors, and/or venture capitalists. Equity gives an investor ownership and possibly some control of the business.
Your Own Savings and/or Investments
It is nearly impossible to start a business without using some of your personal funds. It is difficult to convince someone to take a risk in your idea if you do not. The proceeds of an equity loan could be used to inject initial funds into the business.
Friends, Relatives, Business Associates, etc.
Most small businesses are started with this kind of help. They may provide some of the cash or may guarantee a loan from a financial institution.
Groups invest in a new firm (usually high tech or innovative concepts) looking for an extremely high return on investment. Minimum financing rounds are usually $2-5 Million. Amounts below that range are generally funded by private investor groups also known as “angels.”
Customers can be a source of temporary financing if they provide the raw materials or if they pay a cash deposit. This is not feasible in most businesses.
Once you have established a good reputation with your suppliers you may be able to obtain credit for anywhere from 30 to 90 days. You may be able to order, receive, and sell the goods before the bill is due.
Hopefully you will earn enough profit to be able to reinvest in and expand your business.
Leasing is simply another form of financing. Leasing reduces the cash needed up front, but like a loan, you are obligated to the payment for a certain period of time. Some lease contracts give you ownership of the leased equipment at the end of the term for a specified amount. If your credit is less than perfect, leasing may still be an option. Leasing companies and manufacturers are sometimes less stringent with their lending practices because they are usually leasing equipment that can be easily repossessed. This might be a good option for vehicles, heavy equipment, computers, phone systems, etc.
Colonial Beach Permitting Requirements
Like any jurisdiction, Colonial Beach has specific processes that every new business needs to understand and follow. These processes are in place to promote and improve the health, safety and general welfare of the citizens of Colonial Beach. The processes that are applicable to new businesses fall into two general categories—one that is related to the physical parameters of a business and the other that is related to the financial/registration aspects of a business. Businesses need to understand and differentiate between the two. A Business Permit provides approval for the physical parameters and place of a business and there is a Business License ensures that the business is appropriately registered and pays the appropriate fees.
What Permits Do I Need?
The Office of Planning and Community Development
This department is responsible for the creation and implementation of the physical parameters of a business. It addresses issues related to site location (to ensure that the location identified for the business is appropriate and consistent with zoning regulations, including those related to signage, parking, fencing and other similar zoning norms), building permits (to ensure that structures that are built or renovated are safe and consistent with accepted local, state and national codes such as building codes, occupancy loads, constancy of building use, and other similar safety-related parameters), and the preservation of resources (for example, to ensure the requirements that stem from the Chesapeake Bay Protection Act.)
For any of these matters, contact:
Colonial Beach Department of Planning and Community Development
315 Douglas Avenue
Colonial Beach VA 22443
The choice of location is important to the success of your business and should be determined early in the planning process. Location should take into consideration rental costs, utility costs, building infrastructure, access to customers, foot traffic, access to parking, proximity to other businesses and other issues that you would need to consider that are unique to your type of business.
Once you have identified a desirable location, it is crucial to contact the Department of Planning and Community Development (DPCD) to understand what zoning/building constraints might exist. If the proposed business doesn’t fit within the existing zoning parameters, it is possible to get a variance of the zoning code. Consult with the DPCD to understand the process.
After consultation regarding zoning/building constraints, any additions or changes to a building require permitting by the Department of Planning and Community Development. This is to ensure that any structure used for the business is safe and conforms to local, state, and national building codes and standards. It will be necessary to get a Building Permit and ultimately a Certificate of Occupancy before the business can operate in the newly built or renovated building.
Fencing and signage are also permitted by the Department of Planning and Community Development.
The Treasurer’s Office
This department is responsible for the general registration of any new business in Town and for the collection of fees and taxes. Every new business must obtain a Business License through the Treasurer’s Office and pay the appropriate licensing fee. Existing businesses need to renew their licenses and pay asociated fees and taxes through the Treasurer’s Office.
For any of these matters contact:
Colonial Beach Treasurer’s Office
315 Douglas Ave.
Colonial Beach, VA 22443
Restaurants, other food establishments, or businesses that might impact the health of it’s customers need to contact the Health Department for the appropriate certificates and licenses.
Westmoreland County Health Department
11849 Kings Hwy
Montross, VA 22520
Any establishment selling alcohol will need to get an ABC license.
Virginia Department of Alcoholic Beverage Control
Lee Hill Building II
10304 Spotsylvania Ave, Ste 101
Fredericksburg, VA 22408
Any employer with three or more regular employees is required to furnish workman’s compensation insurance coverage at no cost to the employees.
Virginia Workers’s Compensation Commission
10000 DMV Drive
Richond, VA 23220
For many professional jobs (i.e. contractors, real estate agents, etc.) a license is required through the Virginia Department of Professional and Occupational Regulation (DPOR).
9960 Mayland Drive
Richmond VA 23233
Every business should have business insurance. In most cases the insurance is required depending on the type of business. Consult your local insurance agent.
We know there is a lot here, but there are people that can help!
Who Can I Talk To?
University of Mary Washington
Small Business Development Center Warsaw Office
The Regional Center
453 Main Street Suite 479
Warsaw, VA 22572
Phone (804) 333-0286, Fax (804) 333-0187
Colonial Beach Chamber of Commerce
106 Hawthorn St.
Colonial Beach, VA 22443
Phone/Fax (804) 224-8145
Town of Colonial Beach
315 Douglas Ave
Colonial Beach, VA 22443
U.S. Small Business Administration
Virginia District Office
400 North 8th Street, Suite 1150
Phone: 804-771-2400, Fax: 804-771-2764
Thank you to our featured photographers: Debbie Biemeck, Mary Carter, Erich Cosby, Marc, Fitzsimmons, Larry Goven, Bobby Hooker, Bill Hutchins, Susan Pietras-Smith, and Katrina Price. Information in the Business Development section provided by the Town of Colonial Beach, VA and developed and written by the Planning Commission of Colonial Beach, VA.
Chamber of Commerce
106 Hawthorn St.
Colonial Beach, VA 22443