budget at Business Franchise

Dumouchel, J. Robert. Government Assistance Almanac. Detroit: Omnigraphics, Inc.

Edwards, Charles J. and James V. Shuster, eds. Guide to Federal Funding for Governments and

Nonprofits, 2 vols. Arlington, VA: Government Information Services.

Federal Register. Washington, D.C.: U.S. Office of the Federal Register, National Archives and Records Administration.

U.S. Office of Management and Budget. Catalog of Federal Domestic Assistance. Washington, D.C.: U.S. Government Printing Office.

Keep in mind: Lack of good information is one obstacle to finding the right government funding agency. There may be a great deal of information on federal funding programs, but much of it is confusing and contradictory. Call the agency in question before applying for government funding in order to obtain the most up-to-date information on the program.

I’ll speak about this using the equipment purchasing project. The company buys equipment at the beginning and to substitute the old one. So, the first thing you have to do is to determine your goals.

You could state the project goal as “Goal: To Buy a New Equipment.” That is way too general, though. Don’t stop with that. You haven’t set a deadline for buying the new equipment, you have no criteria for the productivity or capacity, and there is no mention of cost.

Hint: You need to examine the process involved in equipment buying to understand all the decisions you have to make to meet the goal.

One of the most common mistakes that can doom a project from the start is to state the goal in terms that are too general. By working through the equipment -buying process, you begin to see what you need to know before you can start to plan the project. It often helps to get some help from experts. In the equipment -buying example, there are at least two distinct steps of the process:

1. Select item for purchase.
2. Purchase equipment.

You can break each of these steps into multiple subcategories. For example, some subcategories for Step 1 might include the following:

• Identify desired productivity.
• Identify the other desired parameters.
• Identify budget constraints.
• Determine whether identified productivity and other desired parameters meet budget parameters.

After you outline your subcategories, proceed to purchase if you find equipment that meets your criteria. If not, select alternate equipment.

Subcategories for Step 2 might include the following:

• Determine payment method: pay cash or borrow money.
• If paying cash, complete purchase; if borrowing money, evaluate financing alternatives.

And the subcategory borrow money has its own subcategories:

• Find lending company.
• Think about leasing
• Borrow money from friends or family.

Your outline, or map, of the process can quickly expand to many levels. That’s okay. This process is called process mapping. You can see from this example that before you can plan the equipment -buying project, you need answers to the following questions:

• What characteristics do I want the equipment to have?
• How much am I willing to spend on the equipment?
• How will I pay for the equipment?
• By what date do I want to have a new equipment?

After you have answers to these (and perhaps more) questions, you can develop an outcome statement that clearly states the project goal. For example:

“My goal is to buy a new equipment with the productivity …., capacity …, size…, at a cost of $XXX,XXX or less, using an 80 % borrowed money by October 31, 2006.”

Before you start your business (either franchise or not) you need to lay the foundation. I’ve found rather interesting material about project management and business planning and want to share it with my readers with my comments. The material covers impressive project management feats — including some tactics that will dazzle coworkers, whether above or below you on the corporate ladder, helps to understand your project objectives and actually know how to meet each one and many other things.
Conventional project management states that you have three general variables in a project: schedule, budget, and quality. Pick the two you like best and let the others slide. In other words, most project managers and businessmen start their projects with the goal of being only mostly successful. What if you could get things done ahead of time (not just on time) and under budget (not just on budget)? What if you accomplished these feats while maintaining the desired quality? You would be a super project manager. To achieve this you need to know that organization is the key to successful project management and business.
You need to learn how to set goals and then reach them. You need to understand how meet your goals through well-timed and well-executed communication and decision making. As a result you will have the added benefit of being able to eliminate do-nothing meetings and time-wasting distractions ! Learning these skills will help you manage yourself, your team, and your business. Using these skills will ensure that your company’s effectiveness is recognized and rewarded. And this recognition is not only words but money, real money!

Another interesting program of the Small Business Administration (SBA) is called the CDC/504 loan program where “CDC” stands for the Certified Development Company. The Certified Development Company is a private nonprofit organization with the main purpose to contribute to the economic development of its community. The organization works with the SBA and privately-owned lending institutions (commercial banks and other financial organizations) to provide financing to small businesses. There are about 270 CDCs in the USA. Each CDC is responsible for a specific geographic area.
 
The main features of the loan are the following:
a) it’s a long-tern loan;
b) the interest rate is fixed during the whole period;
c) there is a limited number of purposes: to acquire real estate,  machinery or equipment for expansion or modernization;
d) in most cases the loan is secured with a senior lien (when provided by privately-owned lender) or with a junior lien (when a loan secured from a CDC and with a full SBA-guaranteed debenture);
e) the borrower has to invest himself not less then 10%.
 
How much a company can get according to this program? It depends on the purposes and job creation factor:
 
1. You will get up to $4,000,000 if you are qualified as a “Small Manufacturer”. A company is considered as small manufacture if its primary business classified in sector 31, 32, or 33 of the North American Industrial Classification System (NAICS); and all of its production facilities are located in the United States.
 
2. You will get up to $2,000,000 if your company’s activity meets at least one of the following public policy goals:
a) Business district revitalization (a strange goal as I think; different people will vary in opinion while explaining the sense of “revitalization”; I can even say that every new company revitalize a business in a district… I don’t like that factor, as it’s not clear to my opinion);
b) Expansion of exports (this factor is a wonderful public goal; every student can explain why export is important for the economy of the district and for the whole country; but one doubt appears in my mind – how will new small business company prove that they are going to expand the export; such statements are based on the international marketing research but small business company – especially a new one – has no money, specialists and other resources to get such research even for one product and for one country… But still I like that factor because it’s economically correct);
c) Expansion of minority business development (Government tries to kill two birds with one stone – to help small business and minority… I like this because it can save some budget money!);
d) Rural development (my comments are the same as to the previous factor);
e) Increasing productivity and competitiveness (oh… one more factor that would be very difficult to prove; especially competitiveness; certainly if you buy a new technology and modern equipment it WILL increase the productivity of the company; but the costs will rise and so on… I’m not sure about this factor);
f) Restructuring because of federally mandated standards or policies (it’s clear and I support this);
g) Changes necessitated by federal budget cutbacks (I like this; when new business creates new jobs in the region or solve some urgent economic or social problems it worth of receiving some support from the Government);
h) Expansion of small business concerns owned and controlled by veterans, especially service-disabled veterans (it’s easy to prove and it’s very noble goal; such people need to know that they can do something for the society, not only society for them; they have a special need to be useful; I really support that goal)
i) Expansion of small business concerns owned and controlled by women (as a woman myself I like this goal… but feminists can say that the Government offend women by this goal: why do they say that women need more help than men…)
 
3. You will get up to $1,500,000 if your project meets the job creation criteria or a community development goal. Generally, your business must create or retain one job for every $50,000 provided by the SBA.

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