How to start a business in Las Vegas

Although there’s debate over whether now is the right time to launch a venture, considering the state of the economy, entrepreneurs who decide to take the risk shouldn’t be deterred by the process of starting a business. A web of resources, including chambers of commerce and nonprofit counseling centers, is available to give start-up operators the tools they need to be successful. Here’s a guide for those who are considering taking the plunge, with advice and information from local business support organizations on what to consider and where to look for help.

MAP IT OUT

Writing a strong business plan is fundamental in positioning a business for future success, said Larry Vierra, director of the Nevada Small Business Development Center. The process of researching and creating a plan often reveals the viability of a business concept, and forces an entrepreneur to consider all aspects of his or her operation, from market niche to pricing structures to long-term goals.

But before starting on the heavy lifting of writing the plan, it’s important to do enough research to make sure the venture is viable, Vierra said.

“Before you put in all this work, you need to look at your model,” he said. “Is there a market for my product or service?”

In addition to researching to identify competitors and pricing, Vierra said entrepreneurs need to determine if the risk and reward of a new business is worth the effort required. If an idea passes these initial tests, a business plan can help turn informal research into a concrete action strategy.

Typically broken down into sections covering company structure, financial projections, market research and overall vision, numerous templates and software programs exist to help in the business planning process. Nonprofits like the NSBDC and SCORE, a business counseling center, also offer free mentoring services and classes covering all aspects of planning and starting a business.

“Planning is the bridge between ideas and execution. It’s a long bridge,” said Raj Tumber, a counselor at SCORE.

Tumber advises entrepreneurs to continuously revise their business plans throughout the writing process, and to have it reviewed by trusted mentors or counselors. Even after opening up shop, it’s important to keep checking the business plan to make sure that goals and projections are on target, Tumber said. If they’re not, corrective action should be taken.

COVERING THE BASICS

A strong business plan will establish a coherent vision for an organization going forward, but moving toward opening a revenue-producing business requires financing, licenses and an office.

Finding the right funding source depends on the size and type of business an entrepreneur hopes to launch.

Banks typically offer larger loans on the scale of tens of thousands of dollars, but for new businesses, other options like micro loans or Small Business Administration loans often provide the needed capital to launch, without the specter of a large loan looming over the company.

Still, the best place to start is usually at a bank, which can provide the information and resources to find the right-sized loan for your business, said Erica Benson, of Nevada State Bank.

Start by interviewing several bankers and getting referrals to find the right fit, Benson said, because good bankers will serve as an advocate and an adviser to the business.

“Once you go to open a business, the better your banker knows you, the more educated they are to have conversations with their loan officer and be an advocate,” said Benson, a bank vice president and business center manager. “They’ll be in the corner for that business owner. If something comes up, they’re able… to be on the same page.”

In considering loan applications, Benson said, banks consider the size of the loan requested, what the loan will be used for and how it will be repaid, among other factors. The bank will also want to review the company’s business plan, as well as its ownership and management structure.

Being organized and having sufficient documentation prepared beforehand can greatly speed up the process, Benson said.

“Whether it’s a term loan or a line of credit, it’s really going to be decided by the type of business as well as what the proceeds will be used for,” she said. “If we’re not able to do (a traditional loan), we go the SBA route.”

Many banks offer SBA loan advising, but entrepreneurs looking to go a different route also have the option of getting a micro-loan from the Nevada Microenterprise Initiative.

The nonprofit organization offers loans of $500 to $35,000, meant to help start-ups that don’t qualify for traditional loans, said Leanna Jenkins, a loan officer and business consultant for the initiative. Qualifying for a loan through the initiative requires at least two rejection letters from traditional lending sources, as well tax return information, budget and cash flow statements, a good credit rating and collateral, Jenkins said.

“Many banks today aren’t loaning to start-ups,” she said. “If somebody is looking to start a business, they’re pretty much out in the cold without financing.”

With financing in place, another major decision is where to locate the business. In this respect, Las Vegas entrepreneurs have some advantages over their counterparts in other cities, as the recession-ravaged local commercial real estate market offers more than its share of bargains for those willing to consider launching somewhere other than their home.

But despite the relatively low prices, Vierra, from the NSBDC, said entrepreneurs should consider starting their business in their home, if possible.

“Opening a space may not happen for a few years, because they may not have enough cash flow,” Vierra said.

The length of many leases, which typically run from three to five years, can also be intimidating for new business owners, said Rebecca Faye, director of the Henderson Business Resource Center. The center runs a program that allows new businesses to sign up for short-term leases on fully equipped offices in its downtown Henderson location, Faye said, which can be a bridge to leasing larger spaces.

When the time does come to operate the business outside the home, Faye said owners should consider the cost, length of the contract, and how much visibility or foot traffic they need to be successful.

Securing the proper licenses for doing businesses requires checking with various local, state and governmental agencies.

Sole proprietorships or general partnerships can register their business names with Clark County, while limited liability companies and other various corporate structures must register with the Nevada Secretary of State, Tumber, the SCORE business counselor, said.

Most for-profit companies will also need to register for a business license with the Secretary of State’s office.

For taxation purposes, businesses need to register for a free employer identification number with the Internal Revenue Service, and check with the Nevada Department of Taxation for information about taxes specific to the business.

The final step is acquiring a local business license, which must be obtained from the municipality where the business is located. In some cases, businesses must obtain several types of licenses at the local level. For example, a pool cleaning business might need one license for pool maintenance and another for landscaping.

Clark County, Las Vegas, North Las Vegas, Henderson and Boulder City all issue separate licenses, which can make things difficult and expensive for businesses that operate in more than one city. But efforts are being made to simplify and unify the process, with municipalities consolidating license types and efforts underway to create multi-jurisdictional licenses for mobile businesses like contractors, says Karen Duddleston, Las Vegas’ business services manager.

Las Vegas has consolidated the number of licenses offered from 387 to 249 over the last year, and has moved its business licensing and planning departments into a single building, located at 333 N. Rancho Drive, to streamline the registration process, she said.

FINAL STEPS

With funding and licensing in place, one last major component of a successful business launch is marketing.

The specific strategies vary based on the type of business and the audience it needs to reach, something that should be considered in the business plan, Vierra said.

Vierra encourages new business owners to stay realistic in their marketing plans, focusing their advertisements on a niche audience. As the business grows, it can afford to spend more on advertising to expand its visibility.

“If you’re going to sell to everybody in the world, you’re going to have to advertise everywhere in the world,” he said. “That’s unachievable for a small business.”

Once a business is open, Vierra says it’s critical to identify benchmarks and continually measure the company’s performance.

“Every month, you need to compare … against a benchmark to make sure you’re company is in good health,” he said. “If they begin to trend away from the benchmark, you need to take immediate action.”

Faye, from the Henderson Business Resource Center, encourages new businesses to access support services early on — whether its classes or counseling through SCORE or the Nevada Small Business Development Center, or networking opportunities through a local chamber. Often, she said, people seek help when it’s already too late to save their company.

“Don’t keep sweeping it under the rug,” she said. “Nobody wants to admit they’re failing, but we want to see you succeed. There’s strength in numbers.”