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How to Start a Business in Phoenix, Arizona

Author: Katie Truesdell Date: June 20, 2014

The sprawl of one of the fastest growing cities presents small business with opportunities and challenges.

Phoenix might be best known for golf courses, tanned retirees and a desert climate, but it’s also an attractive city for business. Some recent accolades: 

Top 10, Fastest Growing Cities (CNN Money, March 2014)

Top 20, Most Innovative Cities in America (Inc. Magazine, April 2014)

Top 25, Best Cities for Small Business (Biz2Credit, May 2014)

Top 75, Best Places for Business and Careers (Forbes, August 2013)

“We are very excited by Phoenix’s business landscape,” says Jason Ebel, cofounder of Warrenville, Illinois-based Two Brothers Brewing Company, which is expanding its operation to Phoenix in September. “Everyone at the City of Phoenix [government officials and those at the Greater Phoenix Economic Council] that we have talked to has been very engaged and helpful as we have been looking to get our project started.”

Here are three tips for launching a business in Arizona’s state capital.

1.  Take advantage of local resources

Phoenix has several organizations that can provide help as you get your business off the ground. Be sure to check out: 

·  Arizona Commerce Authority, for a variety of services and incentive programs for small business or startups, including Arizona Entrepreneur’s Edge, Small Business Checklist, Arizona Innovation Accelerator Fund and Venture Madness

· Arizona Small Business Association, which hosts speed networking events, small business accelerators and a business mentoring program

· City of Phoenix, for information on operating a business in the city, including licensing, zoning, permits, funding opportunities and more

· Greater Phoenix Economic Council, for an overview of the region’s demographics as well as a business toolkit

2.  Make all business agreements official

“The most frequent mistake people make when starting a business in Phoenix is failing to take precautions to protect themselves legally,” says Gregory Poulos, owner of Poulos Law Firm, a business- and estate-planning firm. “In this part of the country, lawyers often refer to the ‘Arizona contract’ as a handshake. Yes, there is nothing wrong in trusting people and their word. But if it is not in writing, your agreement can be misinterpreted, or important representations can be overlooked.” 

Poulos, who moved to Phoenix from New York City nine years ago, says the prevailing attitude of trust in the southwestern city struck him as a huge difference compared to New York and other major cities. He believes Phoenix’s sprawling nature helps perpetuate this culture because there is less awareness and communication of negative business experiences than he has observed in denser cities.

To protect yourself and your businesses, Poulos recommends forming a limited liability company if there is any element of risk, operating the business as a separate entity from any personal finances (such as mortgages, car loans or personal credit cards) and developing contracts for clients, independent contractors and employees. Also, he says, a contract can be formed via email, so take caution with emailed commitments and follow up and confirm all such agreements made from correspondence in inboxes.

3.  Maintain a full pipeline

“To be successful in Phoenix, you need to have multiple irons in the fire at all times,” says Keith Klein, owner of Turning Pointe Wealth Management, who has 16 years of business experience in Phoenix. “Where I have seen businesses fail here is when they lack activity that creates opportunity and revenue.” 

One reason for this, Klein notes, is that Phoenix doesn’t have the large base of Fortune 500 companies that other major cities have to support the economy. Without a plethora of “whale clients,” or major clients, small businesses need more clients to make the business cycle more predictable. While securing a few large clients is appealing, Klein says that having more clients can provide diversity and stability.

 

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