Region 10: Small Business Mistakes to Avoid in Colorado
Starting a small business isn’t easy. But nothing worth doing was ever easy. If you plan on becoming a successful small business, then you need to be able to avoid making the mistakes that small businesses often make. What follows is our list of tips for small business owners. There is certainly more to it than this, but the basics are here. If you are interested in more, we at Region 10 offer small business training and classes, along with a wide range of small business resources and small business loan and grant opportunities.
Not Doing Your Research
One of the most important aspects of any large venture, let alone starting a business, is knowing what you are getting into. Oftentimes, a business starts as an idea, and then gets in trouble as unexpected and unforeseen issues come up which can quickly land the business in trouble in a number of ways. Before you start a business it is best to start by doing research. If you are reading this right now, then you are on the right track. A successful business requires insurances across a range of areas, licensing, inspections, an address, a property, a legal entity (like LLC or sole proprietorship), startup capital, equipment, employees, and a range of legal and financial obligations that it must meet. When starting a business, talking to other business owners can give you a much better idea of what you should be looking at. If you do this well enough, you should already have most of this list in consideration.
Starting a Business Without an Official Legal Entity
It’s tempting to go from idea to action, because it’s not illegal, but it’s also not smart. By creating a legal entity for any businesslike endeavor is a very smart move. Different entities provide different but similar legal frameworks in which to operate, but all of them provide perks to different degrees. Like before, research is key. For instance, an LLC can provide you with limited legal protection from debts and obligations of the business, but a sole proprietorship does not. Similarly, owning an LLC requires you to be a US Citizen in the United States. But this is not a requirement of an S Corporation. Getting a business started is surprisingly cheap. Starting an LLC here in Colorado takes a mere $70.
Not Enough Capital When Starting out
Starting any business is not cheap. That’s why people often times opt for business loans to help them get started. Before you take out your business loan, you need to plan for how much money that will take. When doing the math, remember that there will be hard times, licenses of different types will take time, and depending on your location, may have to come from different county or city entities.
Not Planning for the Down Times
This is a critical element to starting a small business. When you are running your budget you need to take in all of your assumed start up costs, then have a good estimation of how much you will take in based off of market projections. If it looks like you will make twice as much money as you will cost in your first year, then you might succeed. Businesses will have good times and bad times. Sometimes a good business model with great products can fail because the owners didn’t adequately prepare for the down times.
Partnering with Friends and not Business Partners
When people enter into a business they are entering a legal partnership with requirements to meet, much like a marriage. When in a partnership it is important to treat your partner as a business partner, because that is what you two are. Joking and friendship are great but can really get in the way of honest communication and effective decision making. If you are set on creating a partnership make sure that it is not a 50/50 partnership, Having a 51% and 49% partnership or similar can be an effective way to prevent infighting because at least one person can make decisions during a tie.
Knowing the Industry but not the Market
Many small business owners are guilty of this. You might be the best painter in all of Delta county, but if no one has heard of you and you don’t have a way of entering the market, your business will suffer. Many people starting a business, are excellent at their trade but lack the understanding of the market around them. Here at Region 10, we offer a range of marketing and market analysis classes in order to teach new generations of Coloradan businesses how to thrive against all odds.
We hope that these tips can effectively get you started down the road to small business success. Here at Region 10, we serve Delta, Gunnison, Hinsdale, Montrose, Ouray, and San Miguel County in the Mountain west of Colorado by providing small business loans, classes, and other resources to help our small business get off the ground and thriving. Contact us today to learn more!