Starting a Small Business in Colorado: Making the Big Decisions
Getting involved in small business in Colorado can mean big business. The Colorado Office of Economic Development and Trade offers more support for small business entrepreneurs than in any other state, which means that as a small business owner in Colorado you are able to access lots of assistance, support, and information as you progress through the various stages of your business’ growth.
In short, there has been no better time to begin a small business in Colorado and this brief guide has been created to help you get moving on stable footing.
The Small Business Checklist
Starting a business is risky. Before you decide to go for it, you should understand the risks and reduce them through careful planning. A new business venture will affect you and your family; you should be fully aware of this and analyze your reasons for starting a business. Will your venture fit in with your family and lifestyle? The following checklist will help you get yourself in order, asking yourself the tough questions and showing ways to overcome any obstacles. Believe me, there will be obstacles – there always are.
� Seek management advice and counseling. You will want to know who your team of professionals are (accountant, attorney, insurance broker, real estate agent, etc.) and make sure you have constant access to them. Let them know what you are hoping to do, and each of the professionals will be able to offer sound advice from their perspective, creating a very sound base to move forward with. If you need help finding qualified individuals, start with your local Chamber of Commerce.
� Check with your city and county authorities concerning special licenses, taxes, and zoning requirements for the area you hope to operate in.
� Develop a sound business plan with specific goals and objectives. A business plan should address your background, including strengths and weaknesses, and it should evaluate where you are today and how you get to where you want to be x number of time from now (a year, two years, or three years are the most common guidelines).
� Protect your ideas, products, symbols, and logos through proper registration.
âÂ?¢ Develop a financial plan. You need to determine proper pricing for your products and/or services. Do you have enough resources to support both your business and yourself until you start making a profit? What type of financing will your business need – and what type of financing options are realistic for your situation? This step will take some thorough research, and at least one consultation with a financial adviser and accountant.
Business Entry Options
When you decide to go into business, there are typically three options available to you: start a new venture, buy an existing business, or purchase a franchise. Which path you decide is for you will be based on a number of things from start-up capital to flexibility and control. It is always advisable to seek professional accounting and legal help before starting any business, but we’ll briefly cover these three options.
Starting a New Venture
A new start-up business is usually pursued when you have a unique idea that requires special equipment, specific talents, or a new way of doing things. Unfilled markets are another reason to start a new business.
The most basic advantage of starting a new business is that you are in complete control of how your business operates. There is no negative history to overcome, as might be the case in purchasing an existing business. The most basic disadvantage is the need to start from scratch, devising every aspect of your business from a clean canvas.
Things you need to consider when creating a brand-new business include: legal structure, location, marketing and advertising, operating facilities, equipment, employees, taxes, a record-keeping system, and both start-up and operating capital.
Buying an Existing Business
When you buy a business that is already established, you effectively eliminate a lot of the problems associated with creating a brand-new business. For the most part, the legal structure, location, facilities, equipment, and even employees will already be created for you.
Purchasing an existing business can also be complex. You may acquire, in addition to employees and equipment, existing debts.
Things to consider when purchasing an existing business include: How successful and well-known is the business? Is customer loyalty based on the current ownership of the business, or does it provide a unique and/or exceptionally high-quality product or service? Find out why the current owner is selling the business – if it has not been profitable, find out why and then decide if you have a plan to make it profitable. What does the purchase agreement include (i.e. business name, property, equipment and inventory, debts)? Are there liens against the property you are thinking about purchasing? Check with the seller and recorder’s office in the county where you are located. Often, the recorder’s office will be located in your county courthouse.
Purchasing a Franchise
Individuals wanting to operate a business will find a unique opportunity in franchising. A franchise allows you to both own and operate a business, while drawing from the resources of the parent company. This arrangement can reduce some of the risk of going into business for yourself, depending on the quality of the franchiser. However, this is also the least flexible type of business, as much of the control will be based on rules and regulations established by the franchiser.
Do note that while a franchise is a method of going into business, it is not a form of legal structure. The franchiser and your business are two separate structures. You have to determine your own appropriate for of legal structure for your business.
Franchisers usually provide a range of services to assist you in starting and operating your business. It is important that you understand and have written documentation of what services your franchiser will provide, and what is expected of you, the franchisee. Things to think about: what use of the company trademark, trade name, service mark, and other company identification will you have? What rules and regulations, as well as assistance, have been established to help you select the site of your business? What training programs are required, and which are offered by the franchiser? How will the franchiser help with marketing and advertising? What equipment and inventory will be expected that you purchase, and what assistance does the franchiser offer?
Local Small Business Development Center Offices
In Colorado
Small Business Hotline (303) 592-5920
Alamosa (719) 587-7372
Boulder (303) 442-1475
Colorado Springs (719) 262-3844
Delta (970) 874-8772
Denver (303) 620-8076
Durango (970) 247-7009
Fort Collins (970) 498-9295
Fort Morgan (970) 542-3263
Glenwood Springs (970) 384-8522
Grand Junction (970) 243-5242
Greeley (970) 352-3661
La Junta (719) 384-6959
Lakewood (303) 233-5555 x1202
Pueblo (719) 549-3224
South Metro Denver (303) 548-5300
Trinidad (719) 846-5644
Westminster (303) 460-1032
www.coloradoSBDC.org
