How to Start a Business: Complete Steps and Resources

How to Start a Business: Complete Steps and Resources

Copyright Carter McNamara, MBA, PhD. This manual explains each step needed to start a successful business and provides useful online resources for each step.

Sections of This Topic Include

DON’T FORGET ABOUT YOU!

1. Get Yourself Ready First

Are You Personally Ready to Start a New Business?

Many people are so excited about starting a new business, that they forget about one of the biggest challenges — getting themselves ready first. So before undertaking the steps to start a new business, they first should think about:

There are certain traits of successful entrepreneurs. Am I really an entrepreneur?
What are my true passions? How can I retain those in my new venture?
What is my stress level now? Can I take much more?
What are my personal strengths and weaknesses. How can I use my strengths to strengthen my weaknesses?
Are there alternatives that I could do right now?
Are my personal finances in shape before I go to investors?

The following article will help you to answer each of these very important questions.
Entrepreneurs — Are You Personally Ready to Start a New Venture?

Why Do You Want to Start a Business?

To be motivated enough to plan and build a business, it is important to know why you are doing it in the first place. There are many reasons, but you should know your own. Don’t look at others’ reasons for now. Just think about yourself. For example, is your primary reason to:

Make enough money to live on?
Do the business as a hobby?
Learn a new skill?
Work with a team on a common goal?
Benefit others from your product or service?

Also consider

2. Focus On the Journey, Not the Map

The most important part of your planning how to start your business is not the plan itself. The most important part is the planning itself — the thinking about your business, what you want to get from it, who it will serve and how.

The plan is only the “map”, the document. The planning is the real “journey.” That is why it is never a good idea to short-cut your planning by doing, for example, a “one-hour” or a “one-page” business
plan, or to have someone else do the planning and the writing for you.

Here are some guidelines to help you to get the most out of the journey of your planning.

Realize that you’ve already done a lot of planning in your life. Think about what worked before? What didn’t? What can you improve this time?
Do the planning one step at a time. It’s better to do high-quality planning than to rush to get a plan done. Your planning will take as long as it takes.
Start simple, but start. Don’t wait for the perfect time.
The planning does not have to be perfect the first time. You can change it as needed.
It’s your business you are planning. Start with your own ideas first, then polish them with someone else’s.
Do the first 20% of planning that produces the first 80% of results. First plan the big chunks. Add details in the next round.
Give yourself credit as you keep adding to your plan.
Remember that planning the start-up is different than operating it — but it’s just as important.

Also consider
How to Do Planning

TESTING YOUR BUSINESS IDEA

3. What’s Your Business Idea?

You probably had one or more good ideas for a product or service that you thought would be valuable to others. Otherwise, if you want to start a business, you should think of some ideas real soon. Ideas can come from many sources, but for now, it’s important for you to clarify your own idea. Is it a product or a service? A product is a tangible item of value that others are willing to purchase. A service is an intangible series of activities that others are willing to purchase. Regarding your idea, you might not know the answers to all of the necessary questions yet, but think about these initial questions:

Is it a product or a service?
Who is most likely to benefit from it? How do you know?
What will it take for you to produce that product or service?
What will it take to convince others to buy it?
If sales isn’t a skill of yours, how likely can you convince others to sell it?
Do those activities touch your passions? If not, how can you remain enthusiastic?
How likely is the idea to be useful enough to build a business around?

If you do not yet have an idea, then think about:

What types of complaints do you or others often talk about?
What kinds of suggestions do you often hear?
What kinds of products or services do you especially appreciate? Do enough of them exist?
What kinds of skills do you or others have that could be used even more to help others?

What is your business idea?

4. Is It a Viable Business Idea?

What is a Viable Business Idea?

A viable business idea is an idea for a product or service that is very likely to:

Be in high enough demand by potential customers
That they are willing to pay enough money for it,
That the revenue from those sales will consistently
Exceed what it costs to develop and provide the product or service.

Far too many businesses fail because the entrepreneur is firmly convinced that the idea is viable only because he or she so strongly believes in it. Few entrepreneurs are like Steve Jobs who can create a product or service that is in such strong demand that it creates its own market. The vast majority of successful business ideas were verified first before they were transformed into successful products and services.

How to Test If Your Idea is a Viable Business Idea

When thinking about your product or service, Rolfe Larson suggests:

Go online to find similar businesses and interview them. You’ll be surprised how open they are.
Your online research should also guide you to some “experts” in this field: could be retired managers, consultants, state employees, even academics.
If this is a business idea you already know something about, you probably already know some other folks who can offer some insights. Talk to them.
If there’s an industry association that covers that area, contact them.
“Secret shop” potential competitors to learn how they do things.
Identify your target customers and then find ways to interview some of them. A dozen interviews can yield great results. Evaluate their willingness to pay. What do they currently purchase that’s more or less similar?

Is your idea a viable business idea?

Consider Alternatives to Starting a Business?

How About Buying a Franchise? A Business?

Rather than starting a new business, perhaps you could implement your idea by buying a franchise that offers a similar product or service? Or, how about buying a current business? If you have, or if you could get, the funding, then those approaches could save you a great deal of time and effort.

How About Starting a Nonprofit Organization? Social Enterprise?

The amount of time to start and operate a nonprofit would very likely be similar to doing that with a business. Just like a business needs to make a profit, a nonprofit needs to satisfy a strong unmet need in the community. If you could prove that situation exists in your community, then you might start a nonprofit. If you would want to get donations and avoid certain types of taxes, then you would need to start a nonprofit corporation. That would require developing and reporting to a Board of Directors.

Or, you might start a social enterprise, which is a nonprofit corporation in which you generate a profit that is spent on working toward your mission. Social enterprises and social entrepreneurship are increasing among nonprofits around the world. A social enterprise would need a business plan, much like a for-profit business does.

Also consider

INDUSTRY AND BUSINESS MODEL

5. What is Your Business Industry?

Business industries are based on the nature of the products and services that they offer and how they offer them. It helps to know which type of industry your business will be in because:

There are many resources available for each type of industry. Knowing your type will guide you to quickly finding the right type of resources, for example, in industry associations and publications.
Investors and other personnel often use the type of industry to quickly understand the type of product or service offered by a business and the context in which the organization operates.
Knowing your type of industry will help you to efficiently identify the most likely types of competitors, suppliers and collaborators of your type of business.

Examples of types of business industries include transportation, manufacturing, agriculture, mining, information technology, education, construction, health care and education.

What industry is your business in?

6. What is Your Business Model?

Basically, your business model is how you plan to make a profit. For a nonprofit, your business model is how you plan to meet an unmet social need. To consistently make a profit, a business needs to sell a product or service for more money than it costs to develop and provide it.

But that goal requires, for example, always knowing who is best to sell to, what their needs are, what they are willing to pay for it, how you stand out from your competitors. That knowledge comes from carefully developing your business plan — an upcoming step in starting your business.

What is your business model?

PLAN YOUR PROPOSAL AND FUNDING

7. Write Your Business Plan

Now you are ready to go on to the rest of your startup planning and to draft your business plan. There are many benefits of business planning including:

To identify any problems in your plans before you implement those plans.
To get the commitment and participation of those who will implement the plans, which leads to better results.
To establish a roadmap to compare results as the venture proceeds from paper to reality.
To achieve greater profitability in your organization, products and services — all with less work.
To obtain financing from investors and funders.
To minimize your risk of failure.
To update your plans and operations in a rapidly changing world.
To clarify and synchronize your business goals and strategies.

Investors will want to see your business plan. The contents and format of your business plan document depend on what you believe will most effectively convey the highlights of your planning. It also depends on the amount of detail that you want to include. You might even approach some potential investors and ask if they have a preferred format for the business plans that they review.

(The same guidelines for enjoying the journey of your startup planning that were itemized above, should be remembered when doing your business planning.)

8. Get the Necessary Funding

Your business plan will have included financial projections of your expected revenue, expenses and any resulting profits or deficits, usually for each of the business’s first 12 months and then a total for each of the next two years. Those numbers will suggest how much funding you will need to produce the product or service until your expenses are met or exceeded by your sales.

There is a wide variety of sources of funding for a typical business start-up, including, for example, your own money, family and friends, individual investors (“angels”), banks that are bearable for startups, finance companies, state agencies, loans and venture capitalists.

Most new businesses are funded by your own money or money from your family and friends.

Some additional resources in getting funding
Presenting | Building Trust | Asserting Yourself | Influencing Others | Negotiating

DESIGN YOUR BUSINESS

9. Become Legal and Official

Get Assistance?

If you haven’t yet looked at the vast sources of free assistance, then do so now because experts at starting businesses can be extremely useful, especially when attending to the legal aspects of starting your business.
Free Useful Resources

You might decide at this point to hire an attorney to assist you in making the various legal decisions and making the necessary legal filings. (However, you also might consider how many of the kinds of activities in this guide that you could do yourself, by following the advice in the articles throughout this topic.)

Decide Your Legal Structure

Your first decision is about what legal form of a business organization is best for you, for example, a sole proprietorship, partnership, corporation (C or S), limited liability company, etc.? Here is an overview of each type of structure.

Choose Your Business Name

The name of your business is often the first impression that others get about your organization. There is an entire aspect of marketing that is all about choosing of an organization’s name — branding. Be careful to review the advice of experts when choosing a name.

Register Your Business

The best source of free information about all of the activities in federal business registration, including your federal tax ID number, is the Small Business Administration. They provide information about whether you need to register your business and where.

The best sources of free information about all of the activities in state registration, permits and licensing, including the state tax ID number, is in each state’s Secretary of State office. This article links to the information for each state.
State-Specific Startup Guides

Get a Website Domain Name

Your website will very likely be one of your primary means of promoting your business. The critical part of your website is its name (domain name). You need a domain name that matches your branding (the logo and personality) of your business. However, many domain names have already been taken by other people, which means you need to find a domain name soon, especially so no one else takes it.

Get a Bank Account

Think about the types of services that you want when managing your funds for your business. Do you want personalized service where you are talking to a person who will get to know you? Do you want advice about managing finances? Do you want a bank that lends to small businesses?

Intellectual Property — Legally Protect Your Assets

You don’t want someone else using your business name, stealing your writings to publish elsewhere, or copying your products and services. That could be crippling, especially to a new small business. Fortunately, there are strategies for how you can work to protect these assets of yours. The time to get that protection is now when you are starting your business.

Risk Management – Operationally Protect Your Assets

A sudden interruption in the operations of your business can cause a significant loss, not only to your revenue, but to your reputation as you struggle to serve your customers and maintain your cash flow. Strategies to avoid that kind of situation includes having suitable business insurance and contingency plans about how to respond to the most common types of surprises to the operations of a business.

10. Plan Your Staffing

Your most important asset in your business is you and your fellow employees, especially as your business and its products and services expand. When you wrote your business plan, you probably thought about what kinds of expertise are required to develop and provide your products and services. Now is the time to think about what that means in terms of employees, their roles and how they should be organized.

Many of us have worked with others in organizations, but we aren’t familiar with what it takes to get, organize and keep the best employees. The typical activities in staffing include Designing Jobs, Recruiting
Employees, Screening Applicants, Hiring Employees, Orienting Employees, Organizing Employees and Retaining Employees.

Some additional resources in staffing
Traditional Organizational Structures and Design in Businesses | Human Resources | Staffing | Benefits and Compensation | Personnel Policies

PLAN FACILITIES AND SELECT LOCATION

11. Plan Your Facilities

Small-business planning often overlooks the critical importance of clarifying what facilities are needed to support the development and provision of a product or service, and then to plan how to get those facilities. That is true especially if you are providing a product rather than a service because a product often requires space to store the necessary materials and supplies to produce the product.

Now that you’ve thought about your staffing needs, think about what facilities it will take to support them. You also might jump ahead to Develop Your Product or Service and Develop Your Ongoing Supply Chain to think about what facilities you will need to do those activities.

Important decisions about facilities include, for example: How much space do I need for storage? Production? Personnel? How should the facility represent my brand, my colors and tone? What about parking? What about expected future growth? Should I rent or buy?

After answering the above questions and considering the guidelines in the following articles, write down your requirements for facilities. You, or any others who are helping you, can continually reference your requirements to ensure that your facilities meet your requirements.

Some additional resources in facilities planning
Planning | Project Planning | Technical Writing

12. Select the Best Location

Having thought about your needs and preferences for facilities, you are ready to think about where to locate your business. Decisions include, for example: Do I want proximity to my customers? Proximity to my suppliers? Distance from my competitors? What municipalities might grant you some tax breaks if you locate near them? What about parking?

Before you select a location, your answers to these questions and those in the following articles should be written in a specification that you can reference when searching for a location or that you can bring to a real-estate agent. That way, you will be making the best choice based on your actual needs, rather than on your personal preferences.

Some additional resources in selecting a location
Planning | Technical Specifications | Contracting

DEVELOP YOUR PRODUCT OR SERVICE

13. Develop Your Product or Service

Earlier in this topic, you planned some of the activities in product or service development, including identifying and testing your business idea. During your business planning, you identified who your likely customers will be, who your competitors are, what you will charge for your product or service, and how you might sell it to your customers.

Now, you need to:

Write a Careful Design Specification for the produce to service.
Select the best suppliers and vendors to meet those specifications.
Develop the best contracts and purchasing agreements with those suppliers and vendors.
Get the necessary materials into your facility (called inbound logistics).
Develop the first versions of your product or service to sell to your customers.

Later on below, you will begin regularly producing, selling and providing your product or service to your customers.

(To understand the overall activities in product or service development, scan the topics in this article Product or Service Development. To understand the sequence, or chain, of regular activities to continue building and providing the product or service, scan the topics in this article Supply Chain Management.)

14. Develop Your Ongoing Supply Chain

After having done the initial activities in developing your product or service, you need to develop the chain of activities to regularly produce and provide the product or service in the most cost-effective way. That means:

Making sure there will be sufficient resources (materials planning) to produce and provide the product or service to your customers.
Supplying those resources (including identifying who will be the suppliers).
Buying (or procuring) the resources.
Getting those resources into your organization (matters of inbound logistics).
Storing (or warehousing) all of them (that is, how you will inventory them).
Getting purchases from customers and fulfilling their orders.
Getting the product or service delivered to your customer, for example, sell directly or through a retailer (these are matters of distribution and outbound logistics).
Ensuring the product or service meets or exceeds the customer’s expectations (matters of customer service and customer relationship management).

You probably thought about these matters when you wrote your business plan. Now is the time to begin implementing those activities. It will take as long as it needs to take, so don’t rush things.

Supply Chain Management
Supply Chain Management Savvy Can Improve Your Small Business Operations
The Advantages of the Supply Chain Management for Small Companies
How to Develop a Supply Chain Management Plan
How to Find the Balance in Your Small Business Supply Chain

PLAN YOUR MARKETING AND SALES

15. Plan Your Marketing

You already gave some thought to your marketing, including who your customers are likely to be, and what you will communicate to them. But marketing is much broader and even more important than that.

Marketing is the wide range of activities involved in making sure that you’re continuing to meet the needs of your customers and are getting appropriate value in return. So now is a good time to develop a marketing plan that specifies:

Each of the different groups of customers (target markets) that are likely to buy your product or service.
What you want each target market to believe about your organization and the relevant product or service.
The messages that you plan to communicate to each target market.
How each target market prefers to communicate with its stakeholders, and how you plan to convey those messages.
Who will convey what message and when.

The plan also should specify how you plan to use public relations, or the media, to promote your product, service and your entire organization.

16. Plan Your Sales

Sales involves cultivating prospective buyers (or leads) in a certain target market; conveying the features and benefits of a product or service to the lead; and closing the sale (or coming to an agreement on the pricing and any follow-up services). A sales plan for one product might be very different than that for another product.

During your business planning, you probably gave some initial thoughts as to how you plan to sell (your sales strategy) your product or service. Now is the time to add another level of details to those thoughts and to document them in a plan that you can articulate to yourself and to others.

Some additional resources in sales planning
Planning | Organizational Communications | Public Relations | Building Trust | Influencing

SELL YOUR PRODUCT OR SERVICE

17. Start Selling to Your Customers

At its most basic, the activities of selling are the recurring activities to implement your sales plan. That means ensuring there are sufficient personnel, training, communications and supervision to ensure the sales plan is effectively implemented, monitored and adjusted as necessary.

18. Ensure Strong Customer Service

Customer service includes the activities you provide to customers before, during and after they buy from you in order to ensure they are fully satisfied with your product or service and their experience in working with you.

Today, that is changing dramatically. Customers have a much wider range of organizations, products and services to choose from, and they can access them instantly. Customers can also access numerous sources of useful opinions or reviews about the product or service even before they buy them.

Thus, it is more important than ever that organizations remain very good at attracting, satisfying and retaining customers. Customer service has moved beyond being merely transactional to being highly relational.

MANAGE AND GROW YOUR BUSINESS

9. Manage Your Overall Business

The activities of managing broadly include those of planning, organizing, leading and coordinating. The way that the activities are done depends on the life stage of the organization. Features of small businesses usually include having very limited resources, focusing primarily on cash flow, limited time for comprehensive and proactive planning, and decision-making primarily from the personalities of the leaders in the business.

So the activities of managing a small business must be done in the most cost-effective and real-time approaches, always based on highly practical tools and techniques. The following document can be very useful to leaders in a small business.
Free Basic Guide to Leadership and Supervision

20. Grow Your Overall Business

As your customers demand more of your products and services, and as you notice more opportunities to serve more of your current and new customers, you will begin thinking about how to grow your business. There are many ways to grow.

However, growth has to be done very carefully. Otherwise, you can end up worse off than before you starting trying to grow. Fortunately, there has been a lot of research about how best to grow — and change — organizations.

Numerous Free Useful Resources

Free Help to Start a Business

State-Specific Startup Guides – Each state provides very useful and specific information and resources about starting a business in that state.
Small Business Development Centers – Offer free advice and materials as well as loan guarantees, materials and counseling.
SCORE – Works with the Small Business Administration to provide free counseling and materials.
Small Business Administration – Offers free online courses and materials, as well as regional workshops.
BUZgate.Org – Offers a directory of free services for start-up and small businesses, as well as a vast array of resources and tools.

Free Checklists to Start a Business

General

Home-Based Businesses

Online Businesses

Starting An Online Business Checklist Sample
The Ultimate 10-Step Checklist to Starting an Online Business
Ultimate Checklist for Internet Startups & Online Businesses
Online Business Checklist: How to Know if You’re Ready to Market Your Website

Learn More in the Library’s Blogs Related to Starting a Business

In addition to the articles on this current page, also see the following blogs that have posts related to Starting a Business. Scan down the blog’s page to see various posts. Also see the section “Recent Blog Posts” in the sidebar of the blog or click on “next” near the bottom of a post in the blog. The blog also links to numerous free related resources.

For the Category of Entrepreneurship (For-Profit):

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

January 18, 2022March 22, 2023

How to Start a Nonprofit — Complete Guide and Free Resources

How to Start a Nonprofit — Complete Guide and Free Resources

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC,;
Adapted from the Field Guide to Developing, Operating and Restoring Your Nonprofit Board.

This topic in the Library provides comprehensive advice and materials for anyone who is considering starting a nonprofit organization. The reader can use the free information in this Library topic, along with other Library topics that are referenced later on below. If you need more help, see our coaching services.

Sections of This Topic Include

Each of the links listed immediately below is a link to a section later on, farther down below, in this Web page.

Starting Your Nonprofit

Should You Really Start a New Nonprofit?
What Do You Mean by “Starting a Nonprofit”?
Feasibility Study — “Should I Really Start a New Nonprofit?”
Consider Fiscal Sponsorship (another nonprofit to support your tax-exempt status, finances, etc.)
Do You Need a Lawyer to Start Your Nonprofit?
Nonprofit Incubators (help new nonprofits by sharing facilities, equipment, etc.)
Checklists to Help You Register Your New Nonprofit
Table of Reminders for Registering Your New Nonprofit
Something to Avoid: Founder’s Syndrome
Starting a Self-Sustainable Nonprofit

Shutting Down a Nonprofit

Major Resources

Free Booklets — “Guide to Management, Leadership and Supervision” and “Program Design & Marketing”
Free Nonprofit Micro-eMBA — (self-paced, online nonprofit dev. program)

General Resources

Sources of Assistance to Help You Develop Your Nonprofit

Also consider
Related Library Topics

Learn More in the Library’s Blogs Related to Starting a Nonprofit

In addition to the articles on this current page, also see the following blogs that have posts related to Starting a Nonprofit. Scan down the blog’s page to see various posts. Also see the section “Recent Blog Posts” in the sidebar of the blog or click on “next” near the bottom of a post in the blog. The blog also links to numerous free related resources.

STARTING YOUR NONPROFIT

Should You Really Start a New Nonprofit?

There is a great deal of misunderstanding about the benefits of starting a nonprofit. Particularly in times of a poor or rough economy, people think they can start a nonprofit to quickly generate income. Or, when people see a strong, unmet need in the community, they often focus only on the singular solution to start a new nonprofit. The following article gives a very useful description of the realities of starting yet another new nonprofit.

Also consider
Should I Start a For-Profit or a Nonprofit?

Before starting a nonprofit business, there is some preliminary “business” thinking that you really should do. Doing this thinking now can save you — and maybe your employees and clients — a great deal of anguish.
Entrepreneurs — Are You Really Ready to Start a New Venture?

What Do You Mean by “Starting a Nonprofit”?

Get Clear About the Purpose (the Mission) for Your New Organization

Perhaps the best way to really clarify to yourself what you intend to accomplish by starting a new nonprofit is to write a basic mission statement for your organization. You’ll soon need this mission statement anyway if you plan to incorporate your nonprofit (more about incorporation a little later on). The following guidelines may be helpful to you when writing your first, basic mission statement.

1. At is most basic, the mission statement describes the overall purpose of the organization. It addresses the question “Why does the organization exist?”

2. The statement can be in a wide variety of formats and lengths, ranging from a few sentences to a few pages. At this stage in the development of your nonprofit, it might be best to keep your mission statement to at most about half a page.

3. When writing the mission statement, try include description of what you think will be the new nonprofit’s
a) primary benefits and services to clients
b) groups of clients who will benefit from those services
c) values that will guide how your nonprofit will operate
d) how you’d like others to view your nonprofit

4. It’s often useful to refine the first, basic mission statement by adding or deleting a sentence or a word from the mission statement until you feel the remaining wording accurately describes the purpose of the new nonprofit organization.

(You may want to read more about Developing/Updating Mission Statements.)

Now Think About What Kind of Nonprofit You Want to Start

The phrase “starting a nonprofit” can mean several things. Read the following very basic information to begin thinking about what you mean when you set out to “start a nonprofit”. Keep your mission statement in mind when thinking about each of the following. (There will be more specific guidance later on when you read the next subsection Variety of Checklists to Reference When Formalizing Your New Nonprofit.)

You can be a nonprofit organization just by getting together with some friends, eg, to form a self-help group. In this case, you’re an informal nonprofit organization.
You can incorporate your nonprofit so it exists as a separate legal organization in order to a) own its own property and its own bank account; b) ensure that the nonprofit can continue on its own (even after you’re gone); and c) protect yourself personally from liability from operations of the nonprofit. You incorporate your nonprofit by filing articles of incorporation (or other charter documents) with the appropriate local state office. (An incorporated nonprofit requires a board of directors.) In Canada, you can file for incorporation at the provincial or Federal levels.
If you want your nonprofit (and if you think your nonprofit deserves) to be exempt from federal taxes (and maybe some other taxes, too), you should file with the IRS to be a “tax-exempt” organization. (The IRS states that you must be a corporation, community chest, fund, or foundation to receive tax-exempt status. Articles of association may also be used in place of incorporation.) (Probably the most well known type of nonprofit is a the IRS classification of 501(c)(3), a “charitable nonprofit’.) (Being tax-exempt is not the same as being tax-deductible.) In Canada, you can file for tax-exemption at the provincial and Federal levels.
Depending on the nature of your organization, you may also granted tax-deductible status from the IRS. Publication 526 lists the types of organizations to which donations are deductible. In Canada, the Canada Customs and Revenue Agency (CCRA) grants charitable status, and you must be incorporated to achieve charitable status.
So, for example, you could start a nonprofit that is incorporated, tax-exempt and eligible to receive tax deductible donations.
The particular steps you take when starting your nonprofit depend on your plans for your organization, including the nature of its services. They also depend on how the IRS interprets the nature of your organization, including its services. Again, in Canada, you can file for incorporation and tax-exempt status at the provincial or Federal levels.

You may want to read more about What is a Nonprofit?.)

Consider Fiscal Sponsorship to Jump Start Your Organization

In some cases, you might find and work with another nonprofit organization that will act as your fiscal sponsor. A fiscal sponsor might be useful to you if your nonprofit:
1) Does not have sufficient resources to handle startup costs and fees
2) Does not have sufficient skills initially to manage your finances
3) Will address a community need and then no longer need to exist.
See Fiscal Sponsorship — Help You Get Started?

Do You Need a Lawyer to Start Your Nonprofit?

You Can Do Much of the Work Yourself — But Get Legal Advice and Guidance

You can do much of the work yourself to get incorporated and/or tax-exemption and/or tax-deductibility, but you should have some basic guidance and advice from a lawyer who understands nonprofit matters. For example, in the USA, it’s very important how you characterize your plans when filing for incorporation with your state and/or for tax-exemption and/or tax-deductibility with the IRS — otherwise, your new organization may be deemed a for-profit or you may have to pay federal taxes (among other taxes) on your income. In addition, there are various reports and filings you may have to submit. A nonprofit-knowledgeable lawyer can help you a great deal. Ask other nonprofits for references to good
lawyers. Ask a local funder. Call the local bar association. The following link might also help you. See

Nonprofit Incubators

Business incubators are usually facilities that help businesses share resources as low-cost means to getting started. You may have a nonprofit incubator in your community. Contact the local office of the National Council of Nonprofit Associations to find out. The following links will give you an overview of business incubators.
Business Incubation FAQ

Checklists to Help You Register Your New Nonprofit in U.S.

NOTE: Be sure to first read the above section, First Things First — What Do You Mean by “Starting a Nonprofit”? before you jump into any of the following checklists.

The following are a variety of checklists to help you proceed through the various steps to formally start your nonprofit. It’ll help a great deal if you’ve done some preliminary planning — if you haven’t, the above link Preparation for Planning a Business Venture will help you.

You might glance through a variety of the checklists to get an impression of what needs to be done and to select the checklist that you believe is most useful to you. The topic Nonprofit Taxes will be useful reading after you’ve reviewed the following checklists.

10 Keys to Starting a Nonprofit

Various Online Checklists for Starting a Nonprofit Organization

1. Here’s a comprehensive, narrative description of the steps:
How to Start a Nonprofit Organization

2. Here’s another checklist with the information Establishing a Nonprofit Organization – Tutorial and Start a 501(c)(3) non-profit organization. These are very basic overviews of the major steps to start a nonprofit.

3. You might also see How to Start a Nonprofit. It mentions several of the same steps, and adds references to more forms needed by the IRS.

(NOTE: There are samples of articles of incorporation, along with bylaws, at Articles of Incorporation at Corporate Bylaws.)

10 Keys to Starting a Nonprofit Private Foundation

Sites with Numerous Checklists and More Sources of Information

The Nonprofit Startup Checklist offers a list of articles in regard to starting a nonprofit organization.

The Starting a Nonprofit

Table of Reminders for Registering Your New Nonprofit in the U.S.

The following table depicts the important steps required to register your new nonprofit. These steps are also mentioned across many of the checklists referenced above. These steps also assume that you chose not to seek Fiscal Sponsorship.

activity	comment	for help
draft mission statement	draft a brief mission statement that describes the charitable purpose of your new organization; your board should soon review it during strategic planning and authorize the statement	here
recruit board members	(if you plan to incorporate in your state) recruit at least enough board members to meet state requirements for a corporate board (contact state attorney’s office); if you don’t plan to incorporate, consider an informal advisory board to help guide you	here
get a lawyer	to help you file articles of incorporation (if you plan to incorporate), application to IRS for tax-exemption (if you plan to seek exemption from federal taxes); you can do most of the work yourself, but at least have a lawyer review the materials before submission; will eventually need special expertise to review personnel policies	here
get banker and bank account	get a bank account; seek bank that understands needs of new, small nonprofit	here
get accountant	get an accountant or other finance expert to help you set up basic bookkeeping system; when you get a board treasurer, then he/she can be very helpful in this regard	here
get insurance agent	you may need liability insurance, property insurance, and when you hire staff: worker’s compensation, health and life insurance benefits, etc.	here
draft articles of incorporation and get board approval	these specify legal description of your organization and power to the board; you’ll need to draft these only if you plan to file for incorporation with your state; the Board should approve the Articles before submission	here
draft bylaws and get board approval	these specify how the board will operate and configure the staff; some states require these; some of this information will be in the Articles if you file Articles; the board should approve the bylaws	here
file for incorporation with state	register for incorporation including submitting your drafted and approved Articles (if you plan to incorporate); may need to submit bylaws, too; also find out what various reports the state wants from nonprofits	secretary of state or secretary of commerce
file for federal tax-exempt with IRS	apply for tax-exempt status (to be exempt from paying federal taxes); board should approve this filing before submission;	here
get state tax exemption from state	once you get IRS exemption, file for any state tax exemptions	state attorney, attorney general or secretary of commerce
get property tax exemption from city	once you get IRS exemption, file for any state tax exemptions	local city tax assessor
get solicitation license	if you plan to solicit funds, your city may require a solicitation license	local city offices
get mail permit	this permit gives you a discount on bulk mailings	local post office
get federal employer number	(do this once you start to hire employees) get federal employer number to withhold income and FICA (once you hire employees)	secretary of state, secretary of commerce
get unemployment insurance req’s	do this once you start to hire employees	secretary of state, secretary of commerce

Something to Avoid: Founder’s Syndrome

Founder’s Syndrome occurs when an organization operates according to the personality of someone in the organization (usually the founder) more than it operates according to the mission of the organization. The Syndrome is not uncommon. To learn how to “diagnose” and recover from the syndrome, including to just stay away from it in the first place, read:
Founder’s Syndrome — How Organizations Suffer — and Can Recover

FREE RESOURCES

Free Booklets — Guides to Management and to Program Design and Marketing

(The following booklets are geared to new managers and supervisors of new nonprofits. The reader might be best served to print the booklets for ongoing reference.)

Basic Guide to Management and Supervision provides complete guidelines to accomplish basic skills in management and supervision, including to staff the organization, train employees, manage performance of employees and develop personnel policies associated with these supervisory practices.

Basic Guide to Nonprofit Program Design and Marketing provides complete guidelines and resources to develop your nonprofit programs and services “from the ground up”.

Free, Online Nonprofit Organization Development Program

This free, self-paced program will guide you through starting your new nonprofit, building your board, training about basic skills in management and leadership, conducting strategic planning, developing a program and marketing plan, developing a fundraising plan, understanding basic financial and tax management practices, staffing and supervising, and more. The program includes 12 online, self-directed learning modules. Learners progress through each module at their own pace. Learners complete each learning module when it’s appropriate to the particular stage of their organization’s development. Learners are highly encouraged to complete and share assignments with their board members. See
Free, Online, Self-Paced Program to Completely Build/Strengthen Your Nonprofit

Also consider
Supersites

Sources of Assistance to Help You Develop Your Nonprofit

Organizations, Websites, Newsletters, etc.

Don’t forget that if you need help, there are plenty of resources available to help you, including organizations, information on Websites, online newsletters, etc. See

Helpful Guidebooks for You

Much of the information in this topic was adapted from the following guidebooks:

For the Category of Capacity Building (Nonprofit):

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

January 18, 2022March 29, 2023

Entrepreneurs — Are You Personally Ready to Start a New Venture?

Businessman-working in an office writing on a note

Entrepreneurs — Are You Personally Ready to Start a New Venture?

A new venture can be starting an organization or buying one, as well as significantly expanding the current organization. Far too often, people are so eager to start a venture that they end up skipping some very important personal considerations. This topic will help you ensure that you are really personally ready to start your new venture. Near the end of this topic, there are links to topics with instructions and resources for starting a new business, buying a business, buying a franchise or significantly expanding one.

Sections of This Topic Include

What is an Entrepreneur? Are You One? Really?
What Are Your Passions? Can You Build On Them?
What is Your Stress Level Now?
What Are Your Strengths? Your Weaknesses?
Have You Considered Alternatives?
Are Your Personal Finances in Shape?
How to Stay Sane During Planning
If You Are Still Going to Start a New Venture …

General Resources

Sources of Additional Assistance for Entrepreneurs

Also consider
Related Library Topics

What is an Entrepreneur? Are You One? Really?

Everyone who thinks about starting a new venture believes that they are truly entrepreneurs — but many of them actually aren’t. So before you start your new venture, start taking a close look at yourself. Read these articles about the traits of a successful entrepreneur and then decide how well you have those traits.

The following short self-assessments ask you a range of questions to help you to further decide for yourself if you are indeed an entrepreneur and, if so, what kind? Answer the questions as honestly as you can. You are the only one who will see the answers.

What Are Your Passions? Can You Build On Them?

A passion for starting a new venture should be one of your primary motivators when doing it. Different people are passionate about different things. It’s important for you to know what your true passions are, so you can ensure that they somehow remain in your activities of planning, building and operating your new venture. Your passions could be different than your primary reason for starting a business. For example, your primary reason might be to make money, but you might want that money primarily to pay for your passion of doing photography. Take any of these short self-assessments to determine what your true passions are.

What is Your Stress Level Now?

Before you undertake the challenges and stresses of starting a new venture, you should recognize the level of your stress now. Take one or two of the following self-assessments to identify how stressed you are now.

Also consider

What Are Your Strengths? Your Weaknesses?

The planning to start a new venture involves skills in reviewing documentation, observing and interviewing others, organizing and analyzing information, prioritizing, making decisions, communicating with others and writing reports. It can also require patience, self-confidence, setting goals, and time and stress management. What skills do you have that you can benefit from during your planning? What weaknesses, or areas to improve, might you get help with during your planning?

One of the best ways to make a significant decision about yourself is to do what’s called a personal SWOT analysis. The acronym stands for strengths, weaknesses, opportunities and threats. The analysis asks you to use your strengths to build up or compensate for your weaknesses, and to ward off threats in order to take advantage of opportunities.

Also consider

Have You Considered Alternatives?

Sometimes people try start or buy an organization (for-profit or nonprofit) because they’re frustrated with their lives or current jobs. These are valid reasons. But starting or buying an organization can cause even more frustration! There are alternatives that should be considered before you start a new organization.

How about working to improve your attitude toward your life or work? The frustrations of starting a new venture might make your attitude even worse for you — and those around you.
How about working to get promoted in your current job? This option lets you work from current strengths to shore up areas where you might need growth, and you can usually keep your current benefits and level of income, as well.
How about finding a new job? This can be much easier than starting a new organization. You might even consider getting a part-time job to phase yourself into the full-time role of running your new organization. Sometimes just the activity of interviewing with other companies can remind you of your value, and improve your attitude in your current job.

Here are some other resources to help you think about alternatives to starting a new venture.

Employee Performance Management – Materials in this topic can help you identify performance goals and get help from your supervisor to reach those goals.
Personal Development — This topics includes assessments to help you identify areas where you might want to grow. The topic also has materials to help you set goals and reach them, as well, including by going back to school.
Personal Productivity — This topic includes materials to help you become more effective in your life and work.
Personal Wellness — Materials in this topic can help you to focus more attention on your attitude, personal motivation and overall sense of well being.

Are Your Personal Finances in Shape?

It’s likely that your personal income will be affected if you start a new venture, particularly if you have to invest any of your personal finances. You should consider where your money will come from while you’re getting your new venture off the ground. Where will you get benefits, such as health insurance, auto insurance, life insurance, etc?

Also, potential investors and funders may want to understand your personal financial situation — and will be impressed if you’ve done thorough planning and documentation. You should take stock of your finances now. Introduction to Personal Financial Planning

How Will You Manage the Stresses Involved?

Most people assume that there are many stresses involved in getting a new venture off the ground. Few people really prepare for them. They’re too eager to get the new organization going. You very likely won’t be able successfully to manage the new organization for the long term if you can’t successfully manage yourself as well.

What Are Your Stress Levels Now?

Take the following tests to discern how stressed you might be now.

Resources to Help You Manage Your Stress Level

Staying Motivated and Keeping a Good Attitude (to avoid Burnout and Cynicism)
Stress Management (including Physical Fitness) — There are several basic things you can do that go a long way toward managing yourself. The following articles provide a variety of perspectives and advice.
Time management — Managing cash is usually the biggest challenge in starting and managing a new venture. Getting funding is usually one of the biggest challenges in a small nonprofit. Time management is usually one of the biggest challenges in managing yourself!
Mentoring — Find someone who is willing to help you with ongoing advice. You’re not the first person to start a new venture.
Work-Life Balance — The best way to manage time and stress is to have a life other than just your new venture.
Managing Interpersonal Conflicts and Handling Difficult People — If you’re stressed out, it’ll seem like everyone else is, too.
Resources for Nonprofits or Resources for For-Profits — There are plenty of sources of free help. It’s amazing how we fail to take advantage of resources unless we have to pay for them!
Fitness Tips for Entrepreneurs
Basics for New Managers and Supervisors to Manage Themselves

How to Stay Sane During Planning

The planning involved in starts a new venture is an extremely important element in the success of your new venture. It forces you to slow down and think about what’s truly most important to do and by when. It helps you to avoid the sudden crises that are so prevalent in the new ventures that fail. Here are some guidelines to keep you in the kind of patient and thoughtful mindset to do your best kind of planning.

Realize that you’ve already done a lot of planning in your life. Think about what worked before? What didn’t? What can you improve this time?
Do the planning one step at a time. It’s better to do high-quality planning than to rush to get a plan done. Your planning will take as long as it takes.
Start simple, but start. Don’t wait for the perfect time.
The planning does not have to be perfect the first time. You can change it as needed.
It’s your business you are planning. Start with your own ideas first, then polish them with someone else’s.
Do the first 20% of planning that produces the first 80% of results. First plan the big chunks. Add details in the next round.
Give yourself credit as you keep adding to your plan.
Remember that planning the start-up is different than operating it — but it’s just as important.

If You’re Still Going to Start a New Venture

You Don’t Have to Do This Alone

If, at this point, you have carefully answered the above critical questions, then congratulations! You are indeed very serious about starting a new venture — and you’re that much more likely to succeed! There is a vast range of free resources to help you. Find some help now.

Resources to Start Your New Venture

Sources of Additional Assistance for Startups

For the Category of Entrepreneurship (For-Profit):

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

January 18, 2022August 26, 2022

How to Start Any Type of Organization — Guidelines and Resources for Entrepreneurs

Close-up-hands-with-unfocused-background

How to Start Any Type of Organization — Guidelines and Resources
for Entrepreneurs

Assembled by Carter
McNamara, MBA, PhD; Authenticity
Consulting, LLC

First, Do Some Careful Preparation

Before starting a new business (whether nonprofit or for-profit),
there is some very important thinking that you really should do.
See:
Entrepreneurs
— Are You Really Ready to Start a New Venture?

Should You Start a For-Profit or a Nonprofit? Which?

There are some basic considerations to address when making
this decision. See:
Should
I Start a For-Profit or a Nonprofit?

How to Start a For-Profit Business

Guidelines
and Many Resources for Starting a For-Profit Business

How to Start a Nonprofit Organization

Guidelines
and Many Resources for Starting a Nonprofit Organization

Additional Sources of Additional Assistance

Resources
for For-Profits
Resources
for Nonprofits

Also see
Related Library Topics

Also See the Library’s Blogs Related to Starting an Organization

In addition to the articles on this current page, see the following blogs which
have posts related to Starting an Organization. Scan down the blog’s page to
see various posts. Also see the section “Recent Blog Posts” in the
sidebar of the blog or click on “next” near the bottom of a post in
the blog.

Library’s
Business Planning Blog
Library’s Building a Business Blog
Library’s
Consulting and Organizational Development Blog
Library’s
Leadership Blog
Library’s
Nonprofit Capacity Building Blog
Library’s
Strategic Planning Blog
Library’s Supervision Blog

For the Category of Entrepreneurship (For-Profit):

To round out your knowledge of this Library topic, you may
want to review some related topics, available from the link below.
Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been
selected for their relevance and highly practical nature.

Related Library Topics

Recommended Books

January 18, 2022March 27, 2023

All About Franchising: Guidelines and Resources

All About Franchising: Guidelines and Resources

Sections of This Topic Include

Introduction to Franchising

What is a Franchise Business?
Pros and Cons of Buying a Franchise

Preparing to Become a Franchise Owner

Is a Franchise Right for You Personally?
Alternative: Start New Business From Ground Up?

Selecting the Right Franchise

Typical Process to Become a Franchisee
U se a Franchise Broker?
Research Franchise Opportunities
Do Your Due Diligence!
Before Signing the Franchise Agreement

Funding Your Franchise

Draft a Business Plan
How Much Money Do You Need?
Sources of Funding for Franchises

General Resources

Franchise Organizations
Sources of Franchises
Franchise Laws
Glossaries of Franchise Terms

Also consider
Related Library Topics

INTRODUCTION TO FRANCHISING

What is a Franchise Business?

You have probably heard the term “franchise” and already have a sense
of what it means. When learning more about franchising, it helps to consider
franchising as a very popular business model. It includes two key roles:

The franchisor, who is a person or organization that owns
certain assets, including proprietary products and services, business practices
and intellectual property (especially the business’s brand, for example, its
name, logo and colors).
The franchisee, who is a person or organization that has
gained the rights from the franchisor (by signing a Franchise Agreement) to
use its assets, while also selling its products and services.

The franchisee is usually referred to having “bought the franchise,”
even though the franchisor is the owner of the franchise itself. (Technically,
the Agreement between the two parties is the “franchise”.)

As you know, there are numerous everyday examples of this. Think of the most
common fast-food restaurants that you have probably drive by almost everyday,
such as McDonald’s, Ace Hardware, Midas muffler shops, Pizza Hut, Taco Bell
and Subway.

Also consider
What
is a Franchise?
The
Franchise Business Model 101 – An Introduction
Franchising
101: The Basic Terms, Tips, and Facts You Need to Get Started

Pros and Cons of Buying a Franchise

Pros of Buying a Franchise from a Franchisor

Depending on the terms in the franchisor’s Franchise Agreement, the benefits
for the franchisee can include:

A time-tested business model, including its products and services, operating
practices and intellectual property
The familiarity and reputation of the brand (research shows customers are
often more loyal to an organization’s brand than to its products and services)
Access to a group of customers who are loyal to the brand (the extent of
the access depends on the location of the franchise)
Training programs about operating the business model itself
Ongoing advice and support from the franchisor about starting and operating
the franchise
Savings in time, effort and money from otherwise having to start a new business
model from the ground up
The franchisor’s ongoing advertising of the franchise’s products and services
Easier access to get business funding because lenders’ loans are servicing
a proven business model
Franchisor’s discounts on prices of supplies and inventory

Cons of Buying a Franchise

Depending on the terms in the franchise agreement, the challenges for the franchisee
can include:

Significant startup costs, including an initial, one-time franchise (or
license) fee often between $50,000 to $500,000
Ongoing royalty payments, usually monthly and based on a percentage of the
franchisee’s monthly revenues
Facilities costs, including of property and buildings to match the franchisor’s
requirements
Frequent monitoring of the franchisor’s rules and regulations, which could
be updated at least annually
Ensuring strong conformance to those rules and regulations
Regular reporting of operations and financials to the franchisor
A reputation that is always tied to the franchisor’s, as well

Also consider
The
Pros And Cons Of Buying A Franchise
Have You Considered Alternatives? (add root URL)
What
Are Your Options When You Begin Your Business
Franchise or New Venture?
That Depends on You
What
Are the Alternatives to Franchising?

PREPARING TO BECOME A FRANCHISEE

Is a Franchise Right for You Personally?

If you are thinking about buying a franchise now, then there are some hard
questions that you should be asking yourself. The more honest that you are with
yourself, the less likely that your new franchise will be a big problem later
on in your life. This article Entrepreneurs
— Are You Personally Ready to Start a New Venture? will help you to answer:

Are you really enough of an entrepreneur to run a new business, even if
a franchisor has done much of the work for you already?
What are your passions in life? How can you ensure they remain in the nature
of the work in your new franchise?
What is your stress level now? It will likely increase as you start your
new business.
What are your personal strengths and weaknesses that will affect the success
of your new business? How can you use your strengths to deal with your weaknesses?
Are your personal finances in shape? What attention do they need now to
prepare for getting even more funding to operate your new franchise.

Also consider
Should
I Buy a Franchise?
Is
Buying a Franchise a Good Idea?
Nine
Questions to Ask Before Buying a Franchise
The 2 Most Important
Steps in Deciding If Franchising Is a Good Fit for You
Will There Be Potholes
on the Road to Franchise Freedom? Yes. There Will Be 7, to Be Exact.

Alternative: Start a New
Business From Ground Up?

Since you are interested in starting a new business as a franchise, don’t forget
about the option to start a business from scratch. Here are some pros and cons
regarding that decision.

Pros of Starting Your Own Business From Ground Up

You will likely have lower startup costs than in starting a new franchise,
unless your business idea would involve extensive and ongoing manufacturing
activities.
You can follow your own creative instincts and make your own decisions,
rather than closely conforming to those of the franchisor.

Cons of Starting Your Own Business From Ground Up

The startup activities and the time required are significant. (See the tasks
in the Reference
Manual for How to Start a Business.)
The time it takes to start and operate your own new business until you are
getting profits can be substantially longer than in buying a franchise.
Financing might be more difficult to get as compared to financing a franchise
that has an already well known brand.
It is usually riskier to start your own business model if there is currently
no proof of strong markets and sales, as there would be with a franchise

Also consider
What
Are Your Options When You Begin Your Business
Franchise or New Venture?
That Depends on You
What
Are the Alternatives to Franchising?
Have
You Considered Alternatives?

SELECTING THE RIGHT FRANCHISE

Typical Process to Become
a Franchisee

The article Your
Guide to Pros and Cons of Owning a Franchise describes the following typical
process to start a franchise:

Research to find a franchise that best suits your interests, funding, location,
etc.
Contacting the franchisor and submitting an application
Financial and legal review of the franchisor’s FDD and Franchise Agreement
Creating a business plan that details how you expect to make a profit, as
well as using the plan to get sufficient funding
Signing the Franchise Agreement and paying the initial fee
Franchise training to meet the franchisor’s requirements
Preparing for a grand opening to formally start your operations and invite
customers

Also consider
How
to Franchise a Startup: 4 Tips for Success
How to Open
a Franchise in 7 Easy Steps
How to Start a Franchise
in 8 Strategic Steps
Want
To Franchise Your Small Business? 8 Tips To Get Started
How to Start
a Franchise in 10 Steps

Use a Franchise Broker?

A franchise broker is a person who works with you to help you select and buy
the best franchise, much like a real estate agent helps you to buy a home. Similarly,
the brokers usually work for the franchisors, as real estate agents usually
work for the home sellers.

Thus, the franchise broker’s true allegiance is to the franchisors. So if you
use a franchise broker, you need to be sure who is paying the broker and how
you can ensure that the broker is helping you at least as much as the franchisor.

Consider
What
You Should Know About Working With Business Brokers
How
to Sell Your Business With a Broker—12 Quick Tips
How
to Choose the Right Business Broker
Business
Buyers Be Aware and Beware

Research Franchise Opportunities

There is no shortage of sources of franchise opportunities. Most important
for now, though, is to get clear on what you really want in a franchise. For
example:

What is your primary reason for doing a franchise? Money? Learning? The
Challenge? Use current skills?
What industry do you want it to be in?
Will it be seasonal, eight hours a day or 24/7?
When do you want to start the franchise?
What kind of risks can you tolerate?
How much money do you have to invest?
What kind of lifestyle do you want?

Also consider
How
to Choose the Right Franchise for You
Quiz
to Help You Select the Right Type of Franchise
How
to Determine Which Franchise Business is Best for You
The Eight
Things to Look For in a Franchise Opportunity
How
To Find A Franchise Startup With Potential

Now it might be useful to consider Sources
of Franchises listed in General Resources near the end of this document.

Do Your Due Diligence!

Understand Types of Franchise Illegalities

Franchising is a very popular way to start a business. Consequently, there
are a wide variety of ways that a person might be cheated when considering to
buy a franchise or is already operating one. For example, some ways are:

Franchisors putting undue pressure on potential franchisees to quickly sign
agreements well before the franchisee has had reasonable time to review them
Franchisors improperly making or withholding critical financial, operating
and performance information
Franchisors inappropriately using confidentiality agreements or gag orders
to withhold critical information to franchisees
Franchisors promising certain levels or amounts of profit to be made by
the new franchise
Franchisors who renege on their promises, thereby hurting the already operating
franchisees
Franchise brokers misrepresenting information about their roles and make
improper recommendations about which franchises to buy

Also consider
Franchise
Fraud
Franchise
Fraud: Wake Up and Smell the Fine Print
Protect
Yourself From Franchise Fraud
How You Can Avoid
Being a Victim of Franchise Fraud
How Franchisors are Managing Franchisee Fraud

Checklist to Do Your Due Diligence

Due diligence includes the activities to identify any potential problems in
a certain franchise well before it’s too late to easily fix them. Questions
to get answered should include the following:

Could You Manage the Business Yourself?

Does the nature of the franchise’s activities match your skills and expertise?
Or would you need a business partner to help you? (A business partner would
likely want part ownership.)

Investigate if There’s Been Complaints

Contact the Better Business Bureau. Their services are free. Ask for any information
they can give you. Make sure it matches the franchisor’s Franchise Disclosure
Document (mentioned later on below).

Talk to Other Franchisees

For example, ask them: What do other franchisees say about the skills that
are needed to run the franchise? What are your actual costs compared to those
asserted by the franchisor? What is the quality of the support that you have
gotten from the franchisor? How strong is the franchise’s brand recognition?
What do you wish the franchisor would do even better?

Do Your Market Research

Do market
research to answer these questions: What is the best location for your franchise?
Is there strong likelihood of people wanting the franchise’s products and services
in your preferred location? What are the likely competitors? How could you compete
against them?

Thoroughly Examine the Franchisor’s FDD

Do a deep
drive into franchise’s Franchise
Disclosure Document (FDD) The franchisor must provide you a copy. The FDD
includes a great deal of useful information, for example about various startup
and ongoing costs for the franchisee, responsibilities of both parties, and
typical income and expenses of a new franchise business.

Thoroughly Examine the Franchisor’s Franchise Agreement

Ask for a copy of the Franchise
Agreement, which is the contract that you would sign to formalize your franchise
relationship. Have a lawyer closely examine the Agreement. (The next section
includes more advice about the Agreement.)

Pose Your Questions to the Franchisor

Interview
the franchisor and ask the hard questions that you’ve identified so far.
Record all of the conversations that you had with the franchisor. The following
articles suggest more questions that you should get answered and how to get
them answered.

Also consider
Due
Diligence Checklist for a Franchise
How
to Perform Meaningful Due Diligence When Investigating a New Franchise Opportunity
Doing
Your Due Diligence

Before Signing the Franchise
Agreement

Do not sign the Franchise Agreement until you have had it closely reviewed
by an attorney who has experience with franchise agreements. Also, be sure to
include all of the promises that the franchisor made to you during your discussions.

Also consider

10 Things About Franchise
Contracts- Part 1
The Franchise Agreement
(What to Expect Before Signing)
Completing
and Signing a Franchise Agreement: Things to be Clear on Before Making It Official
What
to Consider Before Signing a Franchise Agreement

FUNDING YOUR FRANCHISE

Draft a Business Plan

The benefits of a business plan are many. However, the most important benefits
now are that the plan will ensure that you have carefully planned your franchise
and that you have a strong case to get funding. Most lenders will want to see
a business plan, even for buying a franchise.

The Library’s topic All
About Business planning will guide you step-by-step through the process
of developing a business plan that is highly customized to your situation. The
topic will suggest that you use especially the growth type of business plan,
rather than a startup business plan, because the business model of your franchise
has already been proven.

How Much Money Do You Need?

Do a Business Budget

When computing how much money you will need, you should draft a business budget
at least for the first year of operations. (That budget might have already been
included in your business plan. The franchisor also might help with developing
the budget.) Overall, the one-year budget should include:

An estimate of the total of one-time and recurring costs (these are mentioned
in the following paragraphs)
Minus whatever money that you can directly contribute, such as from personal
savings, family and friends
The remaining total is what you need to raise from your business funding
activities.

Also consider
Building
Your Franchise Budget

Fees to the Franchisor

The types of costs that a franchisee can incur include the following. (The
franchisor’s FDD document should specify the costs and how they are determined.)
They can include:

One-time franchise or license non-refundable fee often between $50,000 to
$500,000
Ongoing royalty payments, usually monthly and based on a percentage of monthly
revenues
Ongoing advertising fees, usually a percentage of monthly revenues (the
franchisor puts the money from the fees into a pool to do national, regional
and local advertising)

Also consider
What
is a Franchise Fee?

Other Typical Startup Costs

One-time facilities startup costs, including property and buildings to match
the franchisor’s requirement
License fees (usually annual) required in your state and municipality
One-time professional fees, including for an attorney and accountant, ideally
with experience in franchising
One-time cost of your own marketing and development to promote a grand-opening
to formally announce the start of operations and invite customers
Ongoing costs of materials and supplies to develop and provide products
and services
Ongoing labor costs to recruit and train personnel

Sources of Funding for Franchises

It can often be easier to get funding to buy a franchise than it is to start
a new business from the ground up, because lenders can recognize the credibility
of the franchise and realize that it has already been operating as a viable
business. Therefore, the lenders believe there is more likelihood that they
will be paid back, than if the business is a new one. Options for the franchisee
to get money can include:

Angel
investors — These are wealthy individuals or groups who invest in startups
to make a profit and/or to assist a business that is closely affiliated with
their interests or causes.
Bootstrapping —
This means using your own personal sources of funds (savings, retirement funds,
home equity line of credit, etc.). The more of your own money that you put
in, the more inclined investors are to help you. Also, the less that you will
have to borrow and pay back.
Business
partners — They can bring knowledge of the industry, but will likely
require partial ownership in the business.
Commercial
bank loans — This depends on the quality of your business plan, credit
history and available collateral.
Credit
unions — These are usually at a lower interest rate than commercial banks.
You need to be a member of the credit union.
Crowdfunding
– This source includes a marketing campaign via social media that aims to
raise small amounts of donated money from numerous individuals and organizations.
Friends
and family — This can be a quick source of small amounts of funds, but
be sure to still do a formal agreement.
Franchisor financing
— This might include waiving the franchise fee, offering low-cost loans or
partnering with other lenders to help you, as well as offering discounts on
supplies.
Microloans
– These are small, short-term loans with a low-interest rate intended for
small businesses.
Small Business
Administration (SBA) loans — This is useful especially if the franchise
is already SBA-approved. It can be easier to get than a commercial loan, but
the time to qualify and process a loan is typically longer than for a bank.

The 6 Best Financing
Options for Franchising a Business
How
to Get Financing to Buy a Franchise
Where
to Find Franchise Financing
How
to Buy a Franchise on a Limited Budget
How to
Start a Franchise with No Money

GENERAL RESOURCES

Franchise Organizations

American Association of Franchisees and Dealers
FranchiseHelp
Franchise Research Institute
Franchise Times publication

Franchise Laws

Federal
Franchise Rule
The
Franchise Registration States
What
Are the Franchise Laws?
What
is Franchising Law?

Sources of Franchises

SBA Approved Franchises
International Franchise Association
Franchise Registry
Franchise
Times
Franchises for Sale

Glossaries of Franchise Terms

Franchise
Glossary find more?
What
Are Common Franchise Terms?
Franchise
101: 10 Terms You Need to Know

Learn More in the Library’s Blogs Related to Starting a Business

In addition to the articles on this current page, also see the following blogs
that have posts related to Starting a Business. Scan down the blog’s page to
see various posts. Also see the section “Recent Blog Posts” in the
sidebar of the blog or click on “next” near the bottom of a post in
the blog. The blog also links to numerous free related resources.

Library’s
Business Planning Blog
Library’s
Building a Business Blog
Library’s
Consulting and Organizational Development Blog
Library’s
Leadership Blog
Library’s
Strategic Planning Blog
Library’s
Supervision Blog

For the Category of Entrepreneurship (For-Profit):

To round out your knowledge of this Library topic, you may
want to review some related topics, available from the link below.
Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been
selected for their relevance and highly practical nature.

Related Library Topics

Recommended Books

January 18, 2022August 26, 2022

Buying a For-Profit Business

Buying a For-Profit Business

Sections of This Topic Include

Basics and Planning
Where to Find Opportunities to Buy a Business
Screening New Businesses to Buy
– – – Franchises?
– – – Multilevel Marketing Companies?
– – – Business
Incubators (new businesses that share facilities and other resources)
Evaluating the Business
Making the Deal
Tax Implications
Financing the Deal
Closing the Deal

Sources of Free Information and Materials

Also consider
Related Library Topics

Learn More in the Library’s Blogs Related to Starting a Business

In addition to the articles on this current page, also see the following blogs
that have posts related to Starting a Business. Scan down the blog’s page to
see various posts. Also see the section “Recent Blog Posts” in the
sidebar of the blog or click on “next” near the bottom of a post in
the blog. The blog also links to numerous free related resources.

Library’s
Business Planning Blog
Library’s Building a Business Blog
Library’s
Consulting and Organizational Development Blog
Library’s
Leadership Blog
Library’s
Strategic Planning Blog
Library’s Supervision Blog

Basics and Planning

For Some Personal Reflection

Don’t
Start It! Buy It!
Buying a Business
Buying
a Business or Its Assets
So You Think You Want to Buy a Business?

Basics of Planning

How to Buy
a Business
How to Purchase
an Existing Business
How to Buy
a Business

Do You Need Help?

Nine Questions to Ask Before Hiring a Business Broker
A listing
of brokers across the nation

Where to Find Opportunities to Buy a Business

Six
Places to Look (where to find opportunities for buy a business
BizQuest —
Sources of contacts to buy and sell businesses
Business Broker’s
Network – Businesses for Sale

Screening New Businesses to Buy

Basics

What
to Ask When You Call
6 Tips for Finding the Best Buyer for Your
Business

Franchises?

FTC’s
Franchise and Business Opportunity Page
Tips
for Buying a Franchise

Multi-Level Marketing Companies?

(This type of business includes selling through distributors.)

Evaluating the Business

valuation
rules of thumb
Growth
Through Acquisition
Choosing
an Appraiser
Evaluating a Franchise
How
Crisis Management Can Enhance the Due Diligence Process
Rethinking Valuation So You Don’t Miss a Good
Deal

Making the Deal

10 Things to Look for When Buying a Business
How
to Assemble a Team to Buy a Business

Tax Implications

Tax
Implications

Financing the Deal

Financing
by For-Profits

Closing the Deal

Getting
a Loan

Sources of Free Information and Materials

Deloitte & Touche’s extensive and well-organized
list of articles
American
Express’ list of articles
Resources
for For-Profits

For the Category of Entrepreneurship (For-Profit):

To round out your knowledge of this Library topic, you may
want to review some related topics, available from the link below.
Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been
selected for their relevance and highly practical nature.

Related Library Topics

Recommended Books

January 18, 2022August 26, 2022

Basic Terms in Staffing of Employees

Focused man working with female colleague in office

Basic Terms in Staffing of Employees

Sections of This Topic Include

Task
Job
Role
Work Measurement
Job Analysis
Job Description
Job Evaluation
Work Design and Job Design
Staffing Planning
General Resources

Also consider
Related Library Topics

Basic Terms in Staffing of Human Resources

Task

A task is a recurring activity, usually small in scope, that is required in
a job role, for example, complete a daily time card or operate an automobile.

Job

A job is a recurring set of similar tasks and responsibilities in order to
accomplish certain results in an organization.

Role

A role is a recurring activity, larger in scope than a task, that describes
the overall, recurring activities that a person does in an organization. Think
of a part that people play in the organization.

Work Measurement

From the Institute
for Management Services

Work measurement is the process of establishing the time that a given task
would take when performed by a qualified worker working at a defined level of
performance.

Job Analysis

From SHRM

Job analysis is the systematic study of a job to determine which
activities and responsibilities it includes, its relative importance to other
jobs, the personal qualifications necessary for performance of the job and the
conditions under which the work is performed. An important concept in job analysis
is that the job, not the person doing the job, is assessed, even though HR may
collect some job analysis data from incumbents.

From HR Guide to the
Internet

Job Analysis is a process to identify and determine in detail
the particular job duties and requirements and the relative importance of these
duties for a given job. Job Analysis is a process where judgments are made about
data collected on a job.
What is the difference between
job design and job analysis?
Job Analysis:
An Overview
Job Analysis and links

Job Description

A job description is a written document that describes the roles
and responsibilities in a job. There are various different formats of a job
descriptions including title of the job position, brief summary description,
minimum requirements to qualify for performing the job (minimum certifications
and years of experience), job duties and any restrictions in performance (must
be able to lift over 40 pounds).

The activities of a job analysis can suggest the activities needed
in a certain job. It can also suggest the roles and responsibilities in that
job. That, in turn, can generate a job description for that job. Job descriptions
are often referenced to know what to evaluate about an employee when completing
employee appraisals (evaluations).

Job Description
(Wikipedia overview)
How to
Design a New Job (how to create one)
Samples
of Job Descriptions (numerous samples)

Job Evaluation

A job evaluation is clarifying the focus, scope and depth of different jobs,
usually be comparing different, but similar, jobs to each other.

Work Design and Job Design

The Business
Dictionary defines work design as:

An arrangement in the workplace that has the objective of overcoming
employee alienation and job dissatisfaction that comes about from mechanical
and repetitive tasks in the workplace. Work design is used by organizations
to boost productivity by offering employees non- monetary rewards such as satisfaction
from a greater sense of personal achievement. Also called job design.

From Wikipedia

Job design (also referred to as work design or task design) is
a core function of human resource management and it is related to the specification
of contents, methods and relationship of jobs in order to satisfy technological
and organizational requirements as well as the social and personal requirements
of the job holder or the employee.

Work
Design
Work Design (Wikipedia)
Work Design
in an Organizational Context
Principles
of Good Work Design

Staffing Planning

The staffing plan specifies what positions, jobs and/or roles
will be needed by the organization, usually over the next year, along with how
they will be organized into the organization, including who they will report
to and how they will work together.
How to Know What
Positions and Jobs Are Needed

General Resources

Basics, Terms and
Definitions (and Misconceptions) About Management
Basic
Terms in Training and Development
Glossary
of HR Terms
Job,
Role, Competency and Skills Analysis

Also consider
Organizing
or Reorganizing an Organization and Its Employees
Organizational Structures and Design

Learn More in the Library’s Blogs Related to Human Resource Planning

In addition to the articles on this current page, see the following blogs which
have posts related to Human Resource Planning. Scan down the blog’s page to
see various posts. Also see the section “Recent Blog Posts” in the sidebar of
the blog or click on “next” near the bottom of a post in the blog.

Library’s
Human Resources Blog
Library’s
Leadership Blog
Library’s
Supervision Blog

For the Category of Human Resources:

To round out your knowledge of this Library topic, you may
want to review some related topics, available from the link below.
Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been
selected for their relevance and highly practical nature.

Related Library Topics

Recommended Books

January 18, 2022August 26, 2022

Hiring Temporary Workers and Hiring Contingent Workers

Hiring Temporary Workers and Contingent Workers

Various Perspectives on Hiring Temporary Workers and Contingent Workers

Independent Contractors/Freelancers
As
Use of Temp Workers Increased, So Do Challenges for Employers
How to Hire Seasonal Employees

Learn More in the Library’s Blogs Related to Temporary Workers

In addition to the articles on this current page, see the following blogs which
have posts related to Temporary Workers. Scan down the blog’s page to see various
posts. Also see the section “Recent Blog Posts” in the sidebar of the blog or
click on “next” near the bottom of a post in the blog.

Library’s Human Resources Blog
Library’s Leadership Blog

For the Category of Human Resources:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

Related Library Topics

Recommended Books

January 18, 2022March 24, 2023

How to Do Succession Planning

Man discussing business strategy with female employee in an office

How to Do Succession Planning

Sections of This Topic Include

How to Do Successful Succession Planning

Additional Perspectives on Succession Planning

Also consider
Related Library Topics

Learn More in the Library’s Blogs Related to Succession Planning

In addition to the articles on this current page, see the following blogs which
have posts related to Succession Planning. Scan down the blog’s page to see
various posts. Also see the section “Recent Blog Posts” in the sidebar of the
blog or click on “next” near the bottom of a post in the blog.

Library’s Human
Resources Blog
Library’s Leadership Blog
Library’s Supervision
Blog

(Before reading this topic, be sure to read the definitions and various steps
in the staffing process
to notice where this topic fits in the overall process.)

How to Do Successful Succession Planning

Guidelines to Successful Succession Planning

(Various other phrases are used to refer to aspects of succession planning,
including succession management and transition management.)

Management is responsible to ensure that the organization continually has high-quality
operations and employees. One of the most important practices to meet this responsibility
is to conduct successful succession planning. Employees leave their jobs either
on a planned or unplanned basis. Unplanned termination may occur because of
sudden illnesses or death, or poor performance on the part of the employee.
Planned termination usually occurs because the employee is making a career or
life change.

Especially regarding managers in the workplace, demographic trends indicate
that there are not sufficient numbers of next-generation leaders to replace
retiring baby-boomers in organizations. Thus, succession management is an increasingly
important priority. Consider the following advice.

Basic Principles of Successful Succession Planning

Do not wait until the employee will be leaving. Start planning now.

Succession planning is a matter of strong practices in personnel management,
not a matter of sudden crisis management. Start attending to those practices
now.
Focus on policies, procedures and practices, not on personalities.
Succession planning is being able to effectively and promptly re-fill a role,
not replacing a certain person. Be sure all key positions are defined well,
and then look to find the best person to fill the position. Do not look for
someone who is just like, or a lot different than, the previous employee.
Succession planning is a responsibility of the management, not
just the employee.
The best succession planning results from 1) a working partnership between
management and employees to accurately define the employee’s role and
current priorities, and 2) the employee ensuring that management has the information
and resources to refill the role.
Succession planning should be in accordance with up-to-date personnel
policies.
Hiring of new employees must be in accordance with up-to-date personnel policies
to ensure fair, equitable and legally compliant employment practices.
Quality in managing succession is proportionate to the quality of
the new employee.
The best way for management to promptly convey expectations of high quality
to a new employee is to convey that high-quality in how the employee was hired.
The more thorough and careful that management does the succession, the more
likely that the organization will get a new employee who successfully fills
the position for the long-term.

Key Practices in Successful Succession of Managers

If the organization has already established strong practices in governance,
leadership and management, then succession planning often is a matter of using
current practices, rather than establishing many new ones. Key practices include
having:

A strategic plan that clearly conveys the organization’s mission
and current strategic priorities. Ideally, that plan also includes specific
action plans that specify who is going to do what and by when in order to
address each priority.
Up-to-date and management-approved personnel policies about hiring, supervising
and firing personnel in a fair and equitable manner that complies with employment
laws.
An up-to-date job description for each of the roles, and that explains
the general duties and responsibilities of the positions.
Suitable compensation for the roles (often this is a major challenge for
new organizations because they often have very limited resources).
An annual calendar of the role’s most important activities, for example,
when the person in that role evaluates personnel, does any staffing analysis,
updates job descriptions and participates in important committees.
Regular reports from the person in the role. These reports should include
the trends, highlights and issues regarding the person’s activities.
Evaluation of the person on an annual basis, including in reference to
the job description and any performance goals established for that role.
Arrangements with the person when he or she goes on vacation so that others
have an opportunity to effectively replace the employee if only for a temporary
period of time.
A complete list of major stakeholders – of people who have an interest
in, or will be influenced by, the employee’s leaving and being replaced
by someone else. Get a list, including contact information and also how each
is approached and who does that, in case that information is needed when/if
the employee leaves. This is true especially if the employee is a high-level
executive. In that case, get a complete list of other stakeholders, for example,
collaborators and suppliers.
Fiscal policies and procedures to ensure strong oversight of finances,
including that financial numbers are correct and tracked accurately, and also
that there are sufficient funds to pay near-term expenses.
At least annual discussions with key employees regarding succession planning,
including how to manage effectively in the employee’s absence. (Be sensitive
in raising this topic with the employee so that he or she is not overly concerned
that executives somehow want a change now). This discussion can be an opportunity
to hear about the employee’s career plans and desires, too.

Additional Perspectives on Succession Planning

Additional Articles

Learning’s
Place During CEO Transitions
When
Family Businesses Bungle Succession Planning
Succession
Planning
Choose Tomorrow�s Leaders Today
Succession
Stories: The Good, the Bad, and the Ugly
Succession Plan
Succession
Planning: Is It a Staffing Matter? No
Why Does Succession Planning Produce So Few Successors?
How to Ensure Your Business Succeeds You
Performance-Based Succession Planning
What to Do When Employees Resign
Succession Planning and Reflection- Who has the time?

Also consider
Transitioning
to CEO

Transition of Nonprofit Leaders

Although the links in the above section do not mention nonprofits,
their guidelines very likely apply to nonprofits, as well.

Transitioning to New CEO (detailed procedure)
Succession Planning for Nonprofits of All Sizes
resources
from Transition Guides
Succession Planning: Elephant in the Room
Succession
Planning: Is It a Staffing Matter? No
Building Leaderful Organizations: Succession Planning for Nonprofits
Leadership Development and Leadership Change

Also consider
Transitioning
to CEO

For the Category of Human Resources:

To round out your knowledge of this Library topic, you may
want to review some related topics, available from the link below.
Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been
selected for their relevance and highly practical nature.

Related Library Topics

Recommended Books

January 18, 2022February 17, 2023

How to Screen Job Candidates (Interviewing, Background Checks)

businessman shaking hand of applicant in office

How to Screen Job Candidates (Interviewing, Background Checks)

Sections of This Topic Include

How to Interview Job Candidates
Top Three Things I Wish I knew About Background Screening
Additional Information About Screening Job Candidates

Also consider
Related Library Topics

Learn More in the Library’s Blogs Related to Screening Job Candidates

In addition to the articles on this current page, see the following blogs which have posts related to Screening Job Candidates. Scan down the blog’s page to see various posts. Also see the section “Recent Blog Posts” in the sidebar of the blog or click on “next” near the bottom of a post in the blog.

(Before reading this topic, be sure to read the definitions and various steps in the staffing process to notice where this topic fits in the overall process.)

How to Interview Job Candidates

The thoroughness and professionalism you use to interview candidates can make a strong, positive impression on candidates. It also conveys to them that you expect the same from them if they are hired by your organization.

Preparation

Schedule interviews with all candidates that meet the minimum qualifications.
Those qualifications were specified in the job description. This practice helps to make sure that you are not excluding candidates because of unfair biases.
When inviting them for an interview, also send them the job description.
That ensures they have reasonable preparation for the interview. Also mention who will interview them.

Use Multiple Interviewers Per Interview

Consider having multiple people at the interview.
Although this can be intimidating to the interviewee, this practice can ensure them a more objective and fair consideration for the job because several perspectives (among the interviewers) will be considered, rather than only one. Have the same interviewers in all of the interviews, if possible, to ensure that each candidate received equal treatment.

Questions to Pose During Interviews

When posing the following types of questions, always be courteous and respectful to the candidates. Do not share reactions between interviewers.

Do not rely on your memory – ask permission from the candidate for you to take notes. Be sure that you document the name of the candidate and the date on the notes.
While interviewing candidates, always apply the same questions to all candidates.
That approach ensures the fair treatment and comparison of all candidates.
All questions should be primarily in regard to performing the duties of the job.
Do not ask questions about the candidate’s race, nationality, age, gender, disabilities (current or previous), marital status, spouses, children and their care, criminal records or credit records. Asking those types of questions leaves you open to losing lawsuits that allege discrimination.
Ask open-ended questions and try to avoid questions answered with “yes” or “no.”
Open-ended questions tend to generate more useful information and provide the opportunity for the interviewer to observe how well the candidate articulates answers to questions.
Consider asking some rather thought-provoking and challenging questions.
Ask “What skills do you bring to this job?”, “What concerns do you have about filling this role?” and “What was your biggest challenge in a past job and how did you meet it?”
Talk for at most 25% of the time – listen for the rest.
This often is a challenge for new interviewers who feel that silence is somehow to always be avoided. The more time that the interviewer talks, the less time to learn about the candidate.
If it is clear that the candidate is not suitable for the job, then “sell” the organization.
If he/she does not meet the minimum qualifications, after all, or there are other stronger candidates, then use the time in the interview to enlighten the candidate about the positive attributes of the organization in case the candidate chooses to spread the word to others.

Administrative / Human Resource Questions

Ask the candidate about what he/she expects for compensation and benefits.
Even though the job description might specify the pay ranges and benefits, the candidate might have strong preference for other provisions that suit his/her nature.
Find out when the candidate can start work, if offered the job.
Allow him/her at least two weeks to get his/her affairs in order. Expecting a candidate to start sooner might convey to the candidate that the organization operates in a crisis mode, which can be very unattractive to good candidates.
Explain to the candidate when you will be getting back to the person.
Then always do get back to each person soon regarding whether he/she got the job. If your first choice for candidate does not work out, you might have to resort to choosing the second-best candidate. He/she might not accept the job if offended that you did not get back to him/her.
Ask if you can get, and check, any references from the candidate’s previous jobs.
Always contact at least three references that the candidate offers from his/her past work history. Share the results of these activities with the interviewers. If your programs involve direct services to children, adults and the elderly, then seriously consider conducting background checks on the most preferred candidates for the job.
Be sure to tell candidates of any relevant conditions from your personnel policies.
For example, tell the candidate whether there is a probationary period for the job. (The best way to deal with a poor performer is not to hire him or her in the first place. It is often wise to have a probationary period of, for example, six months, wherein if the employee does not meet the responsibilities of the position, you can quickly terminate the employee.)

The Top Three Things I Wish I Knew About Background Screening

A thorough examination of the topic of Human Resources (HR) would include multiple topics. Within those, one would find recruiting. Recruiting is an important topic to everyone in an organization, as the consequences of a bad hire can have a wide organizational effect. In an effort to mitigate the risk of a bad
hiring decision, companies can use multiple tools in their hiring strategy. One of those, background screening, can help identify if your candidate is included in the 56% of applicants that provide false information on their resume. Background screening will also help protect your company from multiple risks including negligent hiring, theft, and workplace violence. But are all background screens created equal?

During the past two years, I have developed a much stronger understanding of this tool. Below is a list of the top three things I wish I understood about background screening before I worked for the industry leading provider of this service.

1. Not all criminal background checks are created equal.

There is no one source for criminal information that will provide you with every record available. However, there are certainly ways to ensure that you are getting the most accurate, up to date and thorough information available. Jason Morris, President and Chief Operations Officer of EmployeeScreenIQ, identifies the following short cuts in his white paper, Best Practices in Employment Screening: using national or statewide searches in lieu of county research, or checking only the current county of residence. These types of searches may save you a few dollars on your background screen; however, the price of not running the more thorough search could be higher than all your other recruiting expenses combined. According to Morris, “an effective criminal program should always include physical research in each county in which the subject has lived, worked, or gone to school over the past seven to ten years.”

2. Fifty-Six percent of applicants falsify information on their application or resume.

While most experienced recruiters understand that applicants may inflate their resume, EmployeeScreenIQ finds discrepancies in resumes on important hiring factors. Those include dates of employment, education, experience, salary, and criminal history.

3. There is an increase in the use of diploma mills.

Nick Fishman of EmployeeScreenIQ defines a diploma mill as “an organization that sells academic degrees and diplomas with substandard or no academic study and without recognition by legitimate educational accrediting bodies. The buyer can then claim to hold the purchased degree and the organization makes a profit. Many of these fraudulent organizations claim accreditation by fake or unaccredited licensing bodies, creating another layer of supposed authenticity.” The number of these organizations has increased in recent years. Perhaps due to the increase in unemployment. Regardless of the reason, hiring someone with fake credentials can be very costly.

Additional Information About Screening Job Candidates

Return to Staffing for the next step in the staffing process.

For the Category of Human Resources:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

How to Start a Business: Complete Steps and Resources

Sections of This Topic Include

Don’t Forget About You!

Verify Your Business Idea

Identify Business Industry and Model

Get the Necessary Funding

Design Your Business

Select Location and Plan Facilities

Develop Your Product or Service

Plan Your Marketing and Sales

Sell Your Product or Service

Manage and Grow Your Business

Numerous Free Useful Resources

DON’T FORGET ABOUT YOU!

1. Get Yourself Ready First

Are You Personally Ready to Start a New Business?

Why Do You Want to Start a Business?

2. Focus On the Journey, Not the Map

TESTING YOUR BUSINESS IDEA

3. What’s Your Business Idea?

4. Is It a Viable Business Idea?

What is a Viable Business Idea?

How to Test If Your Idea is a Viable Business Idea

Consider Alternatives to Starting a Business?

How About Buying a Franchise? A Business?

How About Starting a Nonprofit Organization? Social Enterprise?

INDUSTRY AND BUSINESS MODEL

5. What is Your Business Industry?

6. What is Your Business Model?

PLAN YOUR PROPOSAL AND FUNDING

7. Write Your Business Plan

8. Get the Necessary Funding

DESIGN YOUR BUSINESS

9. Become Legal and Official

Get Assistance?

Decide Your Legal Structure

Choose Your Business Name

Register Your Business

Get a Website Domain Name

Get a Bank Account

Intellectual Property — Legally Protect Your Assets

Risk Management – Operationally Protect Your Assets

10. Plan Your Staffing

PLAN FACILITIES AND SELECT LOCATION

11. Plan Your Facilities

12. Select the Best Location

DEVELOP YOUR PRODUCT OR SERVICE

13. Develop Your Product or Service

14. Develop Your Ongoing Supply Chain

PLAN YOUR MARKETING AND SALES

15. Plan Your Marketing

16. Plan Your Sales

SELL YOUR PRODUCT OR SERVICE

17. Start Selling to Your Customers

18. Ensure Strong Customer Service

MANAGE AND GROW YOUR BUSINESS

9. Manage Your Overall Business

20. Grow Your Overall Business

Numerous Free Useful Resources

Free Help to Start a Business

Free Checklists to Start a Business

General

Home-Based Businesses

Online Businesses

Learn More in the Library’s Blogs Related to Starting a Business

For the Category of Entrepreneurship (For-Profit):

How to Start a Nonprofit — Complete Guide and Free Resources

Sections of This Topic Include

Starting Your Nonprofit

Shutting Down a Nonprofit

Major Resources

General Resources

Learn More in the Library’s Blogs Related to Starting a Nonprofit

STARTING YOUR NONPROFIT

Should You Really Start a New Nonprofit?

What Do You Mean by “Starting a Nonprofit”?

Get Clear About the Purpose (the Mission) for Your New Organization

Now Think About What Kind of Nonprofit You Want to Start

Consider Fiscal Sponsorship to Jump Start Your Organization

Do You Need a Lawyer to Start Your Nonprofit?

How to Start Any Type of Organization — Guidelines and Resources
for Entrepreneurs

Alternative: Start a New
Business From Ground Up?

Typical Process to Become
a Franchisee