Wondering how to start a business? Starting your own business is a great way to increase your income and establish greater self-reliance. While being a business owner isn’t without risks, it can provide more opportunities for growth and long-term stability.
The hardest part? Getting started! Here are 11 steps to get you up and running on your business idea.
1. Refine your business idea
Every successful business starts with a good idea and an entrepreneurial spirit. Your business idea can be inspired by a need you see, a business name idea, or a favorite hobby. Once you have the initial idea, it’s important to refine it. Ask yourself questions, such as
- What is the problem I’m trying to solve?
- What is the core product I will offer to address this problem?
- What do my customers need, and how does my product address that need?
- What are people willing to pay for the product I’m offering?
- Will my business name attract my target customers and make it clear what I have to offer?
Answering these questions will give you some hypotheses that will guide your market research and keep your business model focused on the core of your idea.
2. Conduct market research
Once you have a solid idea of what your business will offer, it’s time to conduct some market research. Market research gives you the opportunity to test the theories you developed as you refined your new business idea. Start by putting together a focus group of people from your target audience and asking them questions that test your theories.
- Would this product help you?
- Where would you expect to find this product?
- How much would you be willing to pay for this product?
In addition to surveying potential customers, it’s important to research your competition. Are there any other companies seeking to address this need? What are they doing well, and what could be better? How much are they charging?
Finally, it’s important to research startup costs for a small business in your chosen field. This may also involve researching potential product sources. This information will help you strengthen your business plan and further refine your idea.
3. Write a business plan
A business plan (sometimes called a business model) is a document that outlines your company’s goals and plans to achieve them. Business plans are important because they help keep you (and any partners in your venture) on the same page as you progress toward opening your company—almost like a business checklist. Here’s what it should include:
- Mission statement (what you do and for whom)
- Business purpose (why your business is needed)
- Findings from your market research
- Financial projections for startup costs and future profitability
Your business plan is also a vital tool as you seek funding for your new business. It shares what your company is all about and lays out the financial viability of your business as an investment opportunity. It also shows that you’ve put serious thought into your new business and that you’re dedicated to its success.
The business plan is an important step in starting your business, so it may be helpful to get help from experts in your area. Organizations like the Small Business Administration in the U.S. or the Federation of Small Businesses in the United Kingdom have lots of resources to guide you through the process. Local small business development centers are also excellent sources of help as you work through this essential business process.
4. Register and license your business
Another important step in setting up your new business is to register your business. While the details vary based on your area, most countries require new businesses to register themselves. This may involve some research on your part to determine the appropriate legal structure for your company. In the U.S., for example, different business structures are governed by different tax codes.
Certain structures also have specific requirements, like maintaining sole proprietorship over the company or securing business insurance. Make sure to research each option available in your area and choose the best structure for your business.
Depending on your business model and your area, you may also need to procure local licenses and permits. For example, if your business will involve food, you’ll likely need to get a food handling permits. These requirements vary by area, so check with your local government to see what licenses and permits you’ll need for your business entity.
5. Open a business bank account
In most areas, you’ll need a business bank account in order to start your business. This helps to keep your company’s finances separate from your personal finances, which minimizes your personal risk. It also makes it easier to ensure that your company’s financial dealings are clean and above board.
It’s important to choose the right type of bank account for your business. It’s common for banks to offer different banking options for different business structures; choosing the wrong type of account could stand in the way of your business’ long-term success. If your business is a general partnership (rather than a sole proprietorship), you may also have to set up a joint account to ensure your partner has equal access to company funds.
It may be helpful for new small business owners to talk to a financial advisor about the options. That way, it’s easier to choose the best bank account for your needs.
6. Secure financing
Once you have a bank account where your company can receive funds, it’s time to secure the business financing you need to make your dream happen. While some business owners are able to cover their own start-up costs, many new companies rely on funding from external sources, such as:
- Small business loans: A loan from a bank or other financial institution. This option will require you to present your business plan for review.
- Business grants: Money available from your local government to help with business costs for companies in essential industries (such as medical care). Requirements and options vary depending on your area.
- Business credit lines: Credit cards and lines of credit available specifically for your business. This option will likely require a check on your personal credit history.
- Friends and family: Donations and loans from friends and family members.
- Angel investors: Funding from investors, which is offered in exchange for a future profits. This option will require you to present a business plan. Angel investors might also ask for a percentage of your company, so it may not be the best option if you want to maintain sole proprietorship.
The financing options available to you will depend on your area, your business structure, your business plan, your company’s industry, and (potentially) your personal financial history.
7. Source products
With your small business funding in place, you need to secure the product you intend to sell. If you plan to make and sell your own products (or if your product is a service that you provide personally), then this step is already done. If not, it’s time to go back to your business plan and the research you did earlier into potential product sources.
As you attempt to choose which manufacturers, farmers, or other goods producers will supply your company, keep in mind that successful small businesses usually seek a balance between affordability and quality.
8. Develop branding
At this point, it’s probably a good idea to start building your brand. Not all small businesses need a fancy logo or branded merchandise. You should go back to your business plan and market research to determine if that level of branding is expected or necessary in your industry. Regardless, your new business should at least have an appealing business name and perhaps a sign to show people where your business is located.
9. Secure a location and equipment
If your new business needs a physical location and equipment, you’ll need to use some of your funding to get both. Refer to your market research and business plan to determine a location that will draw in your ideal customers. Areas with recent economic development are usually good bets to maximize your customer base while keeping costs low.
If you haven’t already gotten business insurance, you will probably want to do so at this point. Business insurance protects your small business from liability in the event of accidents, and it protects your financial investment into your equipment and other property.
10. Market your business
Even with the best product or service in the world, small businesses can’t succeed if no one knows they exist. Successful businesses use their market research and business plans to determine the best way to market their business. Successful businesses choose the right marketing opportunities for their area, their industry, and their ideal customer. Here are a few options to consider:
- A website
- Online advertising
- Billboards
- Radio and TV advertisements
- Flyers
- Posters
- Social media
11. Hire employees
If your business plan calls for it, the final step to open your small business is to hire employees. Do your best to hire employees that understand and support your business’ mission. This will help your employees do their best work to promote your company—both while they’re at work and while they’re at home.
Keep in mind that, depending on the laws in your area, you may be required to get business insurance if you hire employees outside your immediate family. This provides protection to small businesses in the event of an accident, as well as protection for your employees if you need to lay people off.
Conclusion
Hopefully these steps put you on the path toward building a successful business of your own. For more information on how to start a business (or to get help with your current business model), check out the resources below: