Step 1) Plan Your Business Idea
Before you hit the ground running with your Colorado business, you need to have a business plan prepared. A well-crafted business plan is crucial for securing funding and tracking the progress of your business.
A few things you’ll need to include into your business plan are:
- A pitch. A succinct, one-page summary of your business idea. This is essential both for marketing and funding purposes.
- A Unique Selling Proposition (USP). A short sentence or phrase that defines the core mission of your business. To give you an example, our USP at Startup Savant is “Entrepreneurship Simplified.”
- A target market. Who you’re selling to — specifically. It’s absolutely necessary for you to have your target market defined before creating a marketing strategy.
- A marketing plan. How you plan to reach your target market. Once you know who they are, it’s time to find out the best places to communicate with them and what they respond to most.
- Start planning ahead. Where do you hope to see your business in 6 months? What about 3 years down the road? Life is full of surprises and there’s plenty that you can’t plan for, but setting realistic goals is still an important practice.
Resource Recommendation: Check out the free business planning guide that we designed to get you from A-to-Z as pleasantly as possible. We go over creating a USP, developing a marketing strategy, writing executive summaries and a whole bunch more.
If you’re feeling a bit overwhelmed, you might consider leveraging business planning software. There’s a ton of user-friendly programs out there that can make the planning process far simpler. If you’d like to take a look at some of the best options, head over to our top 7 business planning software tools!
Step 2) Form Your Business
The next step in your journey involves choosing a business structure and registering it with the state of Colorado. Registering your business as an official entity is the only way to protect your personal assets and achieve total legal compliance.
Most entrepreneurs choose to form an LLC because it has all the benefits of a corporation but none of the disadvantages like double taxation and formal management requirements.
However, there are plenty of reasons you might want to form a corporation, too. Let’s go over the key distinctions between each business structure so you can get an idea of what sounds like the best fit:
- LLC (Limited Liability Company): Again, this is the most popular business structure because it offers the protection of a corporation without the double taxation or intensive legal upkeep. LLCs also get more versatile taxation options. If your company includes two members or more, you can choose to be treated as a partnership or corporation, while single-member LLCs can opt to be taxed as a sole proprietorship.
- S Corporation: If you’re looking for a more formal structure, an S-corp might be right for you. You’ll be allowed up to 100 shareholders and required to have a board of directors and corporate officers. You also won’t face corporate taxation — all profit/loss will be claimed on the shareholders’ personal tax returns.
- C Corporation: C-corps are organized in the same manner as S-corps, but there’s no limit to the number of shareholders you can have. A C-corp is the only structure that faces double taxation, meaning the business and the shareholders are both required to pay taxes on the profits.
- Sole Proprietorship: Consider this the path of least resistance, but know that it comes at a price. If you’re operating without any partners and haven’t registered a formal business structure, you’ll automatically be classified as a sole proprietor and have no liability protection whatsoever. No need to file articles of incorporation/organization, but you might benefit from filing a DBA.
Resource Recommendation: Since this step can have such serious repercussions if it’s not done correctly, we highly recommend investing a few minutes to read through our business structure comparison guide before deciding on one. Then, when it comes time to officially form your business, you can either do so on your own or use an online incorporation service. Take a look at our top 7 incorporation services for an in-depth discussion of our favorite providers!
Step 3) Tackle License & Tax Obligations
Colorado doesn’t issue general business licenses, but there are a number of scenarios that do call for special permits, licenses and taxes on a local, state and federal level. Here are the best resources for each:
- Federal: The Small Business Association website has tons of helpful information on federal tax requirements and federal licenses and permits. The business taxes page on the IRS website is also an excellent resource.
- State: You can apply for state-specific permits and licenses via the CO Department of Regulatory Agencies.They provide a list of all the professions that require specific licensing and direct you to the corresponding application and other resources.
- Local: For municipal tax and licensing requirements, contact your local chamber of commerce.
Resource Recommendation: If you could use some help with this step, a business license service is a great solution. They’ll determine everything required of your business on a federal, state and local level, get the forms for you and even provide filing instructions.
Step 4) Create a Financial Foundation
Too many entrepreneurs make the mistake of trying to run their business venture out of their personal bank account. It’s super important to create a separate bank account for your business, primarily because it isolates your professional financials and makes them easier to manage and track.
A few things to keep in mind when you’re choosing a business bank account:
- Shop around local banks to see what’s out there. Local banks and credit unions usually have fantastic customer support, so we’d recommend looking into some award-winning Colorado-based banks like Alpine and Bank of Colorado.
- Don’t rule out national banks. Compare their features to those of a few local banks and see how they fare. There are some major benefits to working with a bank like Capital One, including seriously impressive security and small-business perks.
To get going on your research, check out our top 5 business bank accounts for a detailed look at some of our top recommendations.
Resource Recommendation: Once you’ve taken this first step, it’s time to start thinking about managing your finances going forward. If you’re not ready to hire an accountant, there are a bunch of reputable accounting software programs out there. We run through some of the best options in our top accounting software ranking.
Step 5) Finance Your New Business
Now that you’ve got your financial foundation set up, it’s time to get some money rolling in. Colorado is said to have the strongest economy in the U.S., so there are tons of funding opportunities are there — but not all of them are right for every new business.
It’s important to do your research and decide on a primary funding method based on your business’ size, sales forecast, current financial stability, and other important details.
There will also be some restrictions based on things like your location, business size/type and the amount of funding you’re seeking. Before diving into crowdfunding, microloans, social lending or any of the other options, make sure you fully understand their implications. We discuss all of these funding methods and more in our guide to financing a new business.
Resource Recommendation: When it comes to securing funding, you have a couple CO-specific resources at your disposal:
- The Colorado Enterprise Fund offers a ton of help to small businesses seeking funding for their new ventures. Their terms are more flexible than traditional banks, which is a major plus.
- For a full list of funding programs, head over to Choose Colorado. You’ll find a generous assortment of tax credits, jumpstart programs and credit reserves, along with the necessary information to determine which ones are right for your business.
Step 6) Build A Brand
Now that you’ve got the legal and financial aspects of your business taken care of, it’s time to think about creating a brand. There are a number of things that affect your brand image, but two major factors are your business logo and website.
When deciding on a logo design, we recommend keeping a few things in mind:
- Capture the heart of your business. When crafting a logo, you should aim for a design that reflects your business’ mission.
- Stand out. Do a little research on your competition. Examine their website, logo and overall aesthetic, and try to head in a different direction in order to distinguish yourself.
- Create a lasting impression. Choose a memorable, modern visual that will read well to potential customers and easily stick in their minds.
- Bring in a professional. We highly recommend hiring a professional to design your business logo. It’s worth investing a little money to make sure you end up with a quality design that leaves a lasting impression.
For more information on designing a business logo, check out our definitive guide!
Resource Recommendation: Your website is another crucial aspect of your brand image. Often it’s the first experience people will have with your business, so it’s important to make a good first impression. If you’re not a professional website designer, there are still plenty of tools to help you make a beautiful, professional website. Take a look at our top 5 business website builders to learn more.
Step 7) Market Your Business
Finally, it’s time to master the primary skill that will ensure the continual success and growth of your business: marketing. Marketing is quite literally an art, so it’s impossible to distill it down to a few bullet points. Regardless, here are a few things you’ll definitely need to do in order to design a successful marketing strategy:
- Understand your audience. Who are you selling to? Where are they? What qualities do they find appealing/off-putting? The answers to these questions should influence both your marketing content and the platforms you’re advertising on. Even the most brilliant campaign can flop if it’s broadcast in the wrong places.
- Be willing to evolve. Being prepared for change is a fundamental way to save time and money and prevent a massive marketing failure. Don’t be scared to try a new angle if you find, over time, that your original strategy isn’t working.
- Stay focused on central goals. This may sound contradictory to what we just discussed, but it’s not. The point here is to avoid chasing after every marketing idea that comes into fashion. It’s better to invest a significant amount of time and money into one or two stellar marketing ideas than to spread yourself too thin.
- Utilize the tools at your disposal. There are so many fantastic free resources out there to make marketing easier for small-business owners. You can find tools for monitoring your social media, crafting professional emails, calculating ROI and much, much more — all you have to do is seek them out. Marketing a business is a full-time job, but if you’re stuck doing it on your own for now, using services like these can make the task more manageable.
Resource Recommendation: There is so much more to be said about small-business marketing than what we’ve mentioned here. To learn more about the points we discussed and many other topics, head over to our definitive guide!