This startup guide is geared toward the very beginning stage of starting a new business. While it’s designed to help you help yourself, Colorado Springs has many community organizations that support entrepreneurs at low or no cost. There are also a wealth of Colorado Springs business classes, startup events, and business networking opportunities to explore.
Before You Start Your Business
The direction you take your business may change over time, but thinking through the following will set you on the right track.
What exactly will you be selling?
Will it be one or several different kinds of products, one or several different kinds of services, or a combination of both product(s) and service(s)?
Try to write out exactly what your customers will be able to purchase from your business.
Who are your nearest market competitors?
Now that you have a clear idea of exactly what your business will be selling, the next step is to think about who is already selling something similar. Some entrepreneurs create truly unique offerings, but most new businesses will sell things that are similar or comparable to other things that are already for sale.
Your nearest market competitors are the businesses selling something similar or comparable to what you will be selling.
Make a list of those businesses.
- Visit their website, physical location, social media channels
- Read their customer reviews online
- What do they seem to be doing well that you could learn from?
- What do they seem to be doing not so well that you could improve upon?
A good understanding of your nearest market competitors and will clarify what success looks like for a business like the one you’re trying to create. Colorado Springs has many business research resources.
What do your ideal customers look like?
For many first-time entrepreneurs this may seem like an odd question. It’s normal to imagine everyone as your future customer. But think about it: would everyone be a customer of swimming pool services, high tech microchips, and embroidered wedding napkins?
Not at all, right?
Some things to consider:
- Is your ideal customer an individual person (B2C) are another business (B2B)?
- Is your offering for mass market with many kinds of customers or a niche market with a very specialized kind of customer?
- Where are your customers located? – locally, regionally, nationally or globally
- What are the demographics of your ideal customer? – age, gender, marital status, race/ethnicity, income, job/occupation, etc.
- What are the psychographics of your ideal customer? – interests, values, attitudes, preferences, personality traits, etc.
Many businesses use the above information to create customer avatars, which are fictionalized personas for one or several of their ideal customers. These can be useful to keep in mind as you think about marketing and adjusting your product or service offerings.
What is the appropriate structure for your new business?
With a clear understanding of what your business will be selling, what your nearest market competitors are doing, and what your ideal customers look like, you’re in a position to make a good decision on the appropriate structure of your business.
The following are common business structures:
- Sole Proprietor – a business that has a single owner that controls and profits from the business
- Freelancer – a self-employed sole proprietor that typically is simultaneously working on multiple short-term projects with multiple clients
- Partnership – a business where two or more people share ownership, control and profits
- Family Business – a sole proprietorship or partnership that is owned and controlled by one or more members of the same family
- Franchise – an independent branch of another business; typically pays some type of fee for the right to operate and represent the parent business
- Cooperative – a business owned jointly by the employees
- Limited Liability Company (LLC) – a special but common type of business whose assets and debts belong to the business, not to the owners
- Contractor – can take the form of any of the above types of businesses; typically works for one or many clients at a time on longer term projects
- Nonprofit – typically a social organization or charity that is committed toward a cause as opposed to profit generation
Use your own unique circumstances with what you’ve learned about your nearest market competitors to decide on an appropriate business structure.
Which business processes will you internalize and which will you outsource?
There are many moving parts to a business. Not all businesses will have the same needs. Which of these areas are relevant to your business idea? Think through which of the following will be handled internally within your business versus which will need to be outsourced:
- Marketing – content creation, social media, email, paid advertisements
- Website – design, development, site hosting, search engine optimization, maintenance, updates
- IT – computer software and hardware, business technologies
- Customer Care – calls, emails, complaints, customer service
- Accounting and Finance – initial setup, taxes, recurring expenses
- Payroll – employee wages/salaries, tax deductions, insurance, data entry and processing
- Legal and Human Resources – contracts and legal agreements, government regulations, hiring employees, payroll, rent, insurance
- Manufacturing – product design and production, components and assembling
- Logistics – order fulfillment, distribution, warehousing, inventory, packing and shipping
Understanding all the moving parts of a business is a large endeavor for new entrepreneurs. Remember there are low and no cost Colorado Springs business startup resources available to assist you.
It costs money to start a new business, how will you fund it?
It will cost money to get your new business up and running. It’s critical you identify initial startup costs. Failing to properly assess this can doom a new business to failure if there isn’t sufficient money to operate.
The following are some major areas of business expenses:
- Premises – financial deposits and rent, health and safety checks, construction, decoration
- Utilities – telecommunications, gas and/or electric, water
- Regulations – some types of businesses are legally required to carry different kinds of insurance, permits and licenses
- Equipment – nearly all businesses require some kinds of equipment, from heavy machinery down to office supplies
- Technology and IT – hardware and software, support
- Stock – materials, production, storage
- Marketing – branding, logo, graphic design, photography, video, strategy
- Website – design, development, site hosting, site maintenance
- Debt – repayment of loans including interest payments
- Salaries and wages – payroll
It can use useful to separate your startup costs into one-off costs vs. recurring costs. It can also be useful to decide which costs are critical for launch vs. non-critical and can be added on as your new businesses develops.
The following are common sources of business funding:
- Bootstrapping – funding coming from personal savings and income with little to no outside assistance
- Debt – borrowing money; bank loans or finance secured against your personal or business assets
- Equity – selling partial ownership of the business and profits in exchange for funds
- Crowdfunding – sourcing funds from a large number of people, typically each contributing small amounts
Check out local Colorado Springs business funding organizations and programs
Common sources of business funding:
- Family and friends
- Peers and colleagues
- Angel investors
- Venture capitalists
- Governments, economic development organizations, charities
Carefully consider your initial startup costs in light of all the questions in this startup guide. Assess what you think you’ll need to operate. Research the above mentioned options to meet your funding needs.