People do business for different reasons. Some do it exclusively for gaining profit and earning money while others do it out of passion or craving for something. There are also many people who managed to turn their hobbies into profitable businesses. Whatever the reason, though, we must admit that starting a business is always a challenge. If you’ve already tried and failed, you know it firsthand. And if you are a first-time entrepreneur, you feel it for sure. However, with a well-structured starting guide at hand, it will be much easier and less scary. So, we’ve done our best to make up comprehensive instructions covering all major and minor steps you need to take to give your project or business the right start and push it in the right direction. Those who do nothing will get nothing. Hence, keep on reading to feel more confident and start acting.
Main Steps to Start a Business
To set up a business that will become your lifework, it’s better to do some thinking to consider all details and reveal some pitfalls in advance. It’s not worth rushing up. Instead., it’s worth taking some time to create a multi-tier plan that will become your guiding light afterward.
Fortune favors confident and decisive people. So, first and foremost, you need to be strong in your decision to start a business. When you are sure you are ready for a business journey, split the steps you’ll have to take into two parts. This way, you’ll avoid chaos and the feeling that you constantly miss something. Thus, one part is about strategic actions and arrangements that create a proper business background. Meanwhile, the other part is exclusively practical and rather relates to the legal framework, which is also crucial if you want a legal and lawful business.
Acting without a plan, you’ll have fewer chances to achieve success. Hence, working out a general plan that covers crucial stages and sets forth an overall strategy for your future company is a must. Strategic steps related to business startup include:
- Fine-tune your business idea;
- Think about your company name;
- Verify your product or service projection;
- Elaborate on your product or service;
- Create a basic business plan;
- Work out your brand.
Polishing Your Business Idea
If you intend to organize a venture, most likely than not, you already have some kind of thoughts in your head about what sort of activity you’d like to get involved in. However, in a modern world, it’s hard to be unique, with so many great and even ingenious business ideas already realized. So, you’d better think this matter out carefully, do some search within the targeted industry, consider the competition, and figure out their advantages and fortes. You need to come up with something that will make your enterprise different, let it stand out among the rivals, and will become the major strength of your venture.
At this stage, you should work out the concept of your brand and define your business model. Explore the market potential, industry trends, and scope, as well as the opportunities for your projected enterprise. In addition, remember to check for any regulations that might set forth certain restrictions or limitations for your future activities.
If you have no specific idea, you can search through the web and get inspired by the successful experiences of other entrepreneurs. Multiple business idea generators available online can also help find some interesting options. Besides, franchising is always a viable choice when you can use a ready-made model and brand power that needs little to no promotion.
Inventing a Name for Your Company
Many disregard this step or treat it as a minor formality. Yet, strange though it may seem, a name is no less important than a whole entrepreneurial idea. A company moniker is like your business card, it can say a lot about what your venture is and what its mission is. A good name should speak to customers and catch their attention. It should get them interested and eager to contact you or give a try to the products and services you offer. A plain, dull, and inappropriate name, on the other hand, can sound confusing and even offputting, not to mention it will get lost in the plethora of other entities.
To create a distinguishable, memorable, and suitable name for your enterprise that will work for its goals and strong market positions, follow these easy tips:
- Be short and informative: Too long and tricky names are difficult to remember and will hardly become a word of mouth. Don’t go too long, two or three words are enough. If you go longer, use short and simple words that make a meaningful phrase that will attract attention. Acronyms are also good in this concern;
- Be distinctive: Don’t follow the same way as everyone else in the chosen industry not to end up with the name, which is too similar to others. Use fancy words or mix in your own name to sound original. Wok out unique combos by joining the parts of meaningful words in a single non-existent word that will be uniquely yours;
- Be more specific and avoid too generic notions: Try to select words that will best describe what you are doing without going into vague and obscure wording;
- Be unique: It’s rather a rule than a recommendation. Before you can use a chosen name for your enterprise, you need to make sure it’s not used by any other organization to avoid unwanted confusion. Check in the web and search the business name, patent, and trademark databases.
Verifying Your Product or Service Concept
In most cases, business is arranged to make money. So, everything you do will have no sense if your product or service will fail on the market. Thus, before stepping your toes into the world of trade or commerce, it’s worth giving your product a market test. Don’t be scared, though. It’s not as intimidating as it might seem. Besides, this way, you’ll learn if you are moving in the right direction overall.
The easiest checking method is to do a quick search among your family, friends, and relatives. Ask the people you trust what they think about your product and let them be maximum honest and sincere since you want to reveal the downsides.
However, a surefire way to verify your product idea is to get paid for it. Arrange a pre-sale or take pre-orders to figure out if your product really meets the customers’ needs and expectations. Do this even if your merchandise still needs some refining since too much preparation doesn’t necessarily result in success. Meanwhile, initial sales will show if the people are eager to buy or not and where you need to make some improvements or modifications. It’s the customer feedback that will help you align your product with the market expectations and let it gain selling power.
Perfecting Your Product
Once you have a viable product model at hand that will sell itself, elaborate it to perfection. Take into account the customer comments and any recommendations you get and polish your product or service to match the needs of different customer groups and fit in the chosen market niche. Develop the final design and packaging (if applicable). Determine the assortment and calculate the cost. Think about the most efficient selling methods and consider how you can earn on upsales and cross-sales to introduce related accessories or grow your product range eventually.
Drawing a Business Plan
It often happens that plans go no further than putting them on paper. However, nothing works without planning. Even if you won’t strictly follow your initial entrepreneurial plan, casting a methodological look at your overall idea will never go amiss.
Planning helps put everything in order and set a vector for your future actions. It’s about deeper insights into your desires, expectations, and opportunities, as well as an overview of your abilities and powers. It’s something you need to take your business off the ground and push it in the right direction. Besides, planning will reveal the questions you have and let you find the answers to them. So, don’t neglect this step.
Creating Your Brand
The power of a well-set brand is hard to deny. The modern business environment is much more demanding than it used to be. Today, even small home-based businesses bother to work out their own brands and elaborate their corporate style. Branding makes your enterprise distinct and gives it some sort of shape and form. So take some time to develop a logo for your company and branded design for your products to lend a touch of personal style to your whole business and set it apart from competitors.
Preparing to Launch
When the “thinking” part is over, you are ready to move to the next stage which is the so-called preparation. Here, you should define and choose the tools and facilities you’ll need to create a background for your future enterprise by taking the following steps:
- Estimate your finances;
- Create your team;
- Define a location for your business;
- Develop a business website;
- Plan business promotion and marketing campaign.
Considering Your Finances
Business is arranged for making money. Yet, before you start receiving profit, you should spend some funds first, which is a normal thing. Estimating finances is usually the biggest challenge for all beginner entrepreneurs, especially those who launch an enterprise for the very first time.
What you’ll have to do straight away is make up the list of expenses you’ll need to invest in. This is where you need to be maximum attentive and focused since many startuppers tend to overpay for unnecessary or excess items. While the whole checklist will vary by activity type, the most common expenditures include office and/or storage space, workforce, equipment, inventory, marketing, and advertising. A tip here is to avoid spending even a cent before you have a whole picture of costs to cover. This way, you’ll steer clear from buying anything you won’t eventually need. Besides, it’s advisable to review not only initial costs but also the upcoming expenses as soon as you kickstart to understand what expenses will wait for you ahead and manage your cash flows accordingly.
It’s great if you already have a starting capital and can cover your startup costs right out of your pocket. In most cases, though, beginner businessmen end up looking for additional funding. Speaking of which, there are different options to consider depending on your goals, size of your venture, your creditworthiness, and the funding scope you seek:
- Family Loans: You can lend money from family or friends, which is a great option for smaller projects with low startup costs. Just remember to sign some kind of agreement with them to outline all the details of your gentlemen’s contract;
- Business Grants: The biggest benefit of grants is that they are issued for free and don’t need to be repaid. Government grants are normally provided to support smaller ventures that meet certain conditions. Yet, it’s certainly worth considering this option that might be of great help when you are drastically limited on budget;
- Bank Loans: It’s an option available to all types of enterprises. Paying interest to the bank, you can source a sum that will cover all your projected expenses. Bank loans are good both for business startups and their growth maintenance afterward;
- Investments: If you have ambitious plans that call for hefty monetary infusions from the start, engaging third-party investors is a good idea.
If financial planning and funding are not your cups of tea, consider hiring a professional consultant that will help you get your finances in order, distribute cash flows in the right way, and select proper funding options.
Forming Your Team
Finding the right people to work with is as important as choosing the right product or service to sell. Unless you are going to operate on your own, building a good team of workers is crucial to achieving success. Not only should your employees be trained professionals but also they should be reliable people able to smoothly work together as a team.
From your side, to let your staff work like a charm, you need to strictly define their functions and duties, as well as set the rules for dividing labor, providing feedback, and prioritizing tasks.
Finding a Physical Place for Your Business
Not every business needs dedicated office space, warehouse, or shipping area. While some enterprises need just a laptop and a work desk and can be easily run from home, others require some retail area or real marketplace. Your business plan will help you define the type of space you need for your future venture. Just ask yourself several simple questions to think in the right direction:
- Do you need to build and store some inventory?
- Are you going to engage in retail sales?
- Do you plan to have a branded shop?
- Will you be arranging deliveries from your main location?
If you do need to rent space, take some time to evaluate the workloads, the number of people that will work there, and the scope of inventory you need to keep. Leasing a premise for a cafe, snack bar, or restaurant, ponder over a layout. This way, you’ll avoid renting too much space, which is a tendency among those who randomly rent locations before making any plan.
Making up a Business Website
Nowadays, online presence is a crucial part of nearly any business. No matter if you have a small coffee shop, bake pastries for sale at home, or run a veterinary clinic, a dedicated website will help spread the word about your brand and contribute to the overall credibility of your venture. Many businesses exist exclusively online while others smartly combine online and offline presence. Anyway, you’ll never go wrong with creating a business website. Hence, once you have a company name version or brand name you are going to register, check the corresponding domain name availability and use special web tools to build your website or engage a web designer for that.
Planning Business Promotion
Your business concept will have little value unless you promote and popularize it. Irrespective of how ingenious and clever it might seem, it won’t work the way you expect it without proper marketing and advertising. You can use online ads and press releases, advertise yourself through social media networks, newsletters, and onsite campaigns. The marketing tools that will best suit your project depend on the targeted audience and the industry you are about to enter as well as on the scope of your business and the marketing budget you have.
When you’ve made up your mind about what you want and are ready to launch, you come to the final stage of the business startup, which is establishing a legal framework your venture will rest upon for years to come. Many consider it a mere formality, yet a proper legal background not only makes your business lawful but also ensures opportunities for its upcoming development and growth. The steps to take within this stage are as follows:
- Select a legal structure for your future business;
- Establish a business entity;
- Get all the necessary authorizations;
- Set up a business bank account;
- Acquire insurance.
Choosing a Legal Structure
By and large, you can choose between registered and unregistered business forms. Thus, sole proprietorships and partnerships are informal or unregistered structures that used to be the most popular for years. They entail no filing procedures and are simple, straightforward, easy to manage, and offer pass-through taxation. As such, these forms are widely favored by startuppers, beginner businessmen, and home entrepreneurs. On the flip side, though, an unregistered business is an entirely owner’s responsibility in all concerns. You’ll be the one to receive profits and the one liable for the company debts and obligations.
Registered or incorporated entities, on the other hand, offer more personal security to the company owners. Limited liability companies and corporations come up with valuable asset protection making a company exist independently of its owners and drawing a clear line between the owners’ assets and property and those belonging to the legal entity. Besides, registered enterprises gain more loyalty and trust from the customers and look more credible in the eyes of government authorities, financial institutions, and potential partners or sponsors.
Recently, an LLC has been taking the lead due to its combinatory nature and amazing flexibility. The entity mixes a no-frills management system and pass-through taxation of partnerships with a personal protective shield of corporations. All of this makes it extremely adaptable and suitable for a whole wealth of business scenarios. Good for a smaller project, it will easily maintain a rapidly growing venture as well. Meanwhile, corporations engage in much more formalities and are more complex structures overall. However, if you need a framework for a company with great ambitions targeting a nationwide presence and seeking to attract investors for maintaining expansion and growth, a corporation is an optimal alternative for that.
Creating a Business Entity
Should you set your eyes on the registered form of enterprise, to make it eligible, you need to file it with the state first. Normally, it takes a few easy steps pretty common for LLCs and corporations alike:
- Name your future venture or organization: The most important requirement is for the enterprise moniker to be unique and not used by any other registered entity within the state. Otherwise, your application for registration will be rejected. So, as we’ve mentioned above, do the name search to double-check your chosen name version is not occupied yet.
- Appoint a registered agent: This role is compulsory since it helps maintain your enterprise compliance with the state. You can assign either an adult individual or a legal entity with a permanent physical presence in the state of your company establishment to receive your company’s formal correspondence on your behalf.
- Submit your formation documents with the state: Filing the Articles of Organization or Incorporation and getting them approved by the state will finalize official business registration.
For an LLC, it’s also recommended to draft an Operating Agreement to get valid and efficient operational instructions at hand and further enhance the corporate veil protection. Meanwhile, corporations require holding an Organizational Meeting before filing formation docs to appoint executive managers and distribute key responsibilities.
Obtaining Required Authorizations
Getting registered with the state is not enough to eligibly conduct business in most cases. There is also a number of government regulations and rules to match to give your enterprise a well-set legal status:
- Register with the IRS: Taxes are a part and parcel of any business. To identify your company as a taxpayer, you need to obtain an Employer Identification Number (EIN) or a Federal Tax ID. It’d issued by the IRS for free and makes your firm visible for most government bodies, agencies, and institutions. Further proving and strengthening your legal status, this number is also required to hire employees or set up a checking account for your entity;
- Get the necessary licenses and permits: A whole lot of activities pertaining to a specific industry, referred to some kind of profession, or dealing with certain types of products or services should have special licenses or permits to be operated. Those permissive documents might be required at a federal, state, and local level alike. Hence, contact your local or state Department of Revenue to learn what licenses your venture will be exposed to;
- Consider trademarking: If you are serious about your business and want to achieve nationwide popularity at some point or sell your products across the states, consider trademarking. This way, you’ll establish a solid protective shield for your brand;
- File a DBA: Many companies choose to operate on the market under names different from their legal or registered names. To do so, you’ll need to get a DBA (doing business as) status or file a fictitious name in other words. It’s also done at a state level, and the rules are pretty much the same as for naming your enterprise;
- Obtain a foreign qualification: Should you want to expand your activity beyond the borders of the state you’ve registered your LLC in, a foreign qualification will be required.
Opening a Bank Account for Your Business
An assigned bank account sets apart your personal and company assets, which is more convenient and favorable both for taxing and for accounting purposes. This way, you’ll give your venture even more independence showing that you treat it seriously and, thus, further contributing to the liability protection. Notably, a separate transactional account is beneficial for any form of business including formal and informal ones. Finally, entities with their own checking accounts are more likely to get added financing from lending organizations and credit agencies.
Any business is not only about profit, it’s also about risks. To protect your company against those potential risks, you can purchase business insurance policies. Which type of insurance you need for your venture will depend on the type of activities and operations you run. Most insurance companies offer ready-made insurance bundles for smaller firms and come up with industry-specific packages. Most likely than not, you’ll need to have more than one type of insurance in place. The most common of them are general liability insurance, professional liability insurance, and workers’ compensation insurance.
Starting a business doesn’t look easy, and the whole process can turn out a real pain in the neck. Yet, no pain, no gain as they say. So, it’s really worth taking some effort and overcoming the challenges to realize your dreams and ideas and see where an exciting business adventure will bring you in the end. Planning is certainly the best tool in this concern, and once you break it down for yourself, launching a business will feel thrilling rather than scary.