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Launching a business in Oklahoma comes with a higher probability of success than in most other states: 81.51% of Sooner State startups survive their first year, according to Kauffman, which is the 3rd highest rate in the country.
How do such a high number of Oklahoma ventures stay afloat through the tough early stages of a business’s existence? Perhaps the state’s affordable housing prices and cost of living, ranked 4th overall by U.S. News, have something to do with it. Since cash flow is the chief concern for a young firm, not having to shell out for high rent payments and other expenses can mean a lot for a business’s odds of survival.
To further increase your chances of success, we’ve produced this comprehensive guide to starting a business in Oklahoma covering every key step in the process, from developing an idea into a business plan to acquiring occupational licenses and permits necessary to operate legally in the state. In Oklahoma, the odds of success are on your side.
Oklahoma small business statistics at-a-glance
- 350,718 small businesses are active in Oklahoma, which is 99.4% of businesses in the state.
- 712,582 Oklahomans are employed by small businesses, accounting for 52.4% of the Sooner State’s total workforce.
- The median income for incorporated business owners in Oklahoma was $45,387 in 2017.
- The leading small business employment industry in Oklahoma is health care and social assistance, followed by accommodation and food services, and retail trade.
- Oklahoma’s startup survival rate of 81.51% is one of the highest in the nation.
- Oklahoma startups create 5.51 jobs in their first year, on average, which is the 13th highest average among the states.
- Tax Foundation ranks Oklahoma’s unemployment insurance tax as the most business-friendly in the country.
Starting a business in Oklahoma in 12 steps
1. Develop an idea
Every successful business starts with a good idea. Ask yourself these questions:
- Which product or service can your business provide that doesn’t already exist on the market?
- How does your business idea refine an existing product or service?
Determine your personal strengths and interests: developing an idea that suits your personality and positive traits will provide motivation to put in the long hours necessary in addressing the myriad challenges you’ll face in getting your business off the ground.
Figure out how to market your expertise: if your business idea is not something you totally believe in and can sell effectively, it will be much harder to succeed.
2. Do the research
Once you have an idea, it’s time to put it through the wringer and decide if it’s viable in the market. Conduct market research to arrive at answers to these key questions:
- Is there a demand for your product/service in Oklahoma?
- Who is your target market?
- Do existing businesses in Oklahoma offer a similar product/service?
- What makes your business unique compared to the competition?
Coming up with satisfactory answers may require refinement, or even a total overhaul, of your original idea. Be patient: you’ll only want to proceed with the next steps after determining that a niche exists in the Oklahoma market for your business idea.
3. Draft a business plan
Now it’s time to write the blueprint of your business. A great business plan should chart the path of your company from infancy to success while being able to attract investors to provide financing.
Your business plan ought to include the following sections:
- Executive summary – An overview of your business and why it will be successful
- Description of business – Explain the advantages of your business and the problems it solves
- Market research – Provide research on your industry, target market, and potential competitors
- Organization and staff – Detail the nuts and bolts of your business; how it’s structured and who will run it
- Product or service description – State what you are selling or offering
- Marketing plan – Explain your strategy for attracting customers
- Fundraising – The money you’ll need in the next five years to grow your business and how you’ll spend it
- Financial forecast – Data and balance sheets providing a financial forecast for your business
- Appendix – An optional section with supporting and/or requested documents like resumes, letters of reference, permits, etc.
Plan on running your business well
4. Secure funding
Every business needs money to get off the ground. In fact 82% of businesses that fail do so because of a lack of cash flow, U.S. Bank found in a recent study. Your business plan should include a detailed estimate of the funds you’ll need to cover expenses for at least a year, so now it’s time to acquire the money.
If you aren’t wealthy enough to self-fund your business, you can choose from a number of other funding options. These include a loan from the U.S. Small Business Administration, taking out a loan from a commercial bank, launching an equity crowdfunding campaign, or securing funding from an angel investor or venture capitalist group active in Oklahoma.
An angel investor is a wealthy individual who invests their personal finances in a startup, typically in the beginning stages, whereas a VC is a group of investors that will fund a business throughout its existence.
Which route you choose depends on the specifics of your business: angel investors typically invest smaller sums to help get a startup off the ground, while VCs invest larger sums of money in exchange for a greater say in the operations of a business. Smaller startups usually opt to pursue funding from angel investors. Plenty of both types of investors are operating in Oklahoma.
Oklahoma Angel Investors and VCs
- Seed Step Angels – A group of over 50 accredited angels based out of Tulsa that has invested over 16 million in 52 early-stage Oklahoma companies, to date.
- Cowboy Technology Angels – A seed-stage investment group that occasionally hosts a one-day seminar called “Seed Investing as a Team Sport”.
- Oklahoma Venture Forum – Founded way back in 1987, OVF is one of the chief promoters of entrepreneurship and venture capital funding in the state of Oklahoma.
- i2E – An organization boasting over 20 years of guiding and investing in Oklahoma small businesses.
Additional Investor Resources
- AngelList: Oklahoma Angel Investors – A comprehensive listing of 4,920 angel investors seeking the opportunity to fund Oklahoma startups.
5. Decide on a legal business entity
The form of business entity you choose will affect many factors going forward. There are 3 main options to decide from:
- Sole proprietorship – The name for running a business by yourself. Legally, you and your business are one and the same, with no separate legal entity for your business.
- Partnership – It is legally identical to a sole proprietorship, except that it comprises two or more people.
- Corporation – A complex legal structure that is a separate entity (providing legal protection to owners) from the owner and comprises directors, officers, and shareholders.
- LLC – AKA “Limited Liability Company”, this is a hybrid entity between a sole proprietorship and a corporation that possesses advantages of both. An LLCs provides the liability protection of a corporation, yet isn’t subject to double taxation as the profits go through your personal tax return.
Nowadays, LLCs are the option of choice for small business owners as they are easy to manage and provide the benefits of a corporation while lacking their complex structure. Taxwise, they operate more like a sole proprietorship.
You may want to consult with an attorney to help decide which entity works best for your business.
6. Register your business
Once you determine your business structure, you’re ready to register with the state of Oklahoma. The process varies depending on whether you intend to establish a sole proprietorship, LLC, or corporation.
For sole proprietorships
Those that use their own name for their business in Oklahoma need not make any special filings with the state government, but if they intend to use a business name different than your legal name, the state requires you to register a trade name with the Secretary of State.
Before you file a trade name, search the Oklahoma Secretary of State business name database to confirm that your chosen name is available for use in the state.
After making sure the name is free to use, print a Trade Name Report, fill it out, and mail it to the address at the top left-hand corner of the document. You can also file a trade name online. The filing fee is $25. After your trade name is registered, you are free to use it for your business.
For LLCs and corporations
The process of forming either of these two business structures is similar in the state of Oklahoma.
First, you must appoint a registered agent to handle process notices and other government correspondence on behalf of your business. This is a legal requirement in Oklahoma, and most other states. Expect to pay $50-$200 to reserve the services of a registered agent for one year.
Next, perform a search to verify that your business name is free to use in the state. If the name is free, you can go ahead and file the necessary documents to form your business in the state.
Those forming a corporation must file Articles of Incorporation, whereas those forming an LLC must file Articles of Organization. Both documents are available online and can be filed online, or printed out and mailed in.
The filing fee for Articles of Incorporation is a minimum of $50, yet varies depending on a corporation’s total authorized capital. The filing fee for Articles of Organization is $100.
7. Acquire federal and state tax IDs
Now you should obtain a Federal Employer Identification Number (EIN), which is like a social security number for a business and allows you to open bank accounts, handle payroll, and file taxes.
Each state has its own laws and taxes regarding businesses. Check the Oklahoma Tax Commission’s page on business tax types for more information on state-administered taxes that may apply to your business, including sales tax, withholding tax, and franchise tax.
When you’re ready, you can register to pay state business taxes online with the OkTAP service.
Tax-ready all the time
8. Open business banking and credit accounts
Opening a bank account for your business is crucial because it allows you to separate company assets from your personal assets, and makes filing taxes a lot easier. This is a recommended step, even if you are operating a sole proprietorship.
It’s also a wise idea to obtain a credit card for your business because it will help you isolate business expenses and build up credit for your company, which may help in securing investment in later stages.
Banks operating in Oklahoma good for small businesses
We recommend Novo Bank
9. Get the necessary licenses and permits
Depending on the type of business you are opening, you may need to apply for a number of permits and licenses to operate legally. For example, a restaurant will need a liquor license, and a pawn shop will need a reseller’s license. The paperwork may prove a hassle, but it’s a necessary ordeal that will protect you from fines, lawsuits, and other legal hazards.
Oklahoma does not issue a general business license, yet many types of businesses require one or more licenses, permits, or certifications to operate legally in the state. Visit the Oklahoma Department of Commerce Business Licensing + Operating Requirements portal for a comprehensive list of state-regulated professions and businesses, along with links to the agencies tasked with issuing each license and permit.
10. Choose a location
Whether you are running an online business or opening a restaurant, location is everything. Be aware of the demographics of the neighborhood or town that you are considering: Are the local residents likely to visit your business? Will nearby competitors take a share of your potential profits?
Oklahoma’s two largest cities, Oklahoma City and Tulsa, are both excellent cities in which to start a business. Oklahoma City was once similar in population size to Tulsa, but after 30 years of steady growth, it’s population of over 643K is considerably larger than Tulsa’s 402K. Folks have flooded into OKC in recent decades due to its low cost of living and housing prices, as well as the excellent job market and ease of access to funding for small business owners. Overall, it offers a great environment for aspirant entrepreneurs.
Once the “Oil Capital of the World”, Tulsa is no longer expanding at the rate of Oklahoma City but offers many of the same perks of its sister city, including affordable housing and a low cost of living.
11. Get insured
No matter what type of business you form, buying insurance coverage to protect yourself in the case of property damage or legal action is a good idea. In fact, businesses with employees are required by the federal government to have two types of insurance, while others are strongly encouraged, or required at the state level, depending on your business type. Consult with a licensed insurance agent to find out which types of insurance you should get.
Required forms of insurance:
- Workers’ compensation: Covers medical costs and disability benefits if an employee is injured or becomes ill on the job.
- Unemployment insurance: Provides benefits to workers after a loss of job through no personal fault.
Recommended forms of insurance:
- Professional liability insurance: Covers losses as a result of property damage, medical expenses, libel, slander, and negligence claims.
- Commercial property insurance: Covers property damage to business-owned properties and possessions as a result of fire, theft, or storm.
- Disability insurance: Provides short-term benefits for employees suffering an illness or injury. Required in certain states such as California, New York, and Hawaii.
12. Develop an internet presence
Establishing an identity on the web is an important investment in a business’s future development. Here are some key steps in the process:
- Register a domain name for a company website (You can use Domain.com, Bluehost, GoDaddy.com, Namecheap.com). Design the website and fill it with content.
- Create profiles on the popular social media services (Twitter, Facebook, Instagram)
- Register a Google profile for your business
- Create accounts on review sites such as Yelp, Google Reviews, and TripAdvisor
More than a website builder
Oklahoma small business resources
- Oklahoma Secretary of State: Downloadable Business Forms – A directory of forms necessary for registering all types of businesses in the state, most of which can be submitted online.
- Oklahoma Tax Commission: OkTAP – Register to file state-levied business taxes online.
- Oklahoma Department of Commerce: Business Licensing + Operating Requirements – A list of all the common licenses issued for Oklahoma businesses, along with links to where you can apply for them.
- Oklahoma Small Business Development Center – A statewide organization dedicated to assisting small business owners through a variety of means, including free consultation services, and connection to funding sources.
- Startup Oklahoma Resource Directory – A long list of helpful links for Oklahoma-based entrepreneurs.
- Oklahoma Business Incubator Association – A network consisting of many of the top business incubator programs in the state.
- Great Plains Business Development Center – A huge incubator and coworking space in Lawton, OK with a wide variety of facilities, including industrial areas, art studios, and private offices.
- OKC Innovation Station – An Oklahoma City coworking space with affordable leasing prices.
- The Forge – A curriculum-based incubator in Tulsa for startup companies that is the only of its type in the city.
- Oklahoma City | SCORE – The Oklahoma City chapter of the U.S.’s leading business mentoring network.