Starting a Business?
10 Steps To Start A Small Business
There are more than 28 million small businesses in the United States, making up a whopping 99.7 percent of all U.S. companies, according to the Small Business Administration. When you consider some of the most popular reasons to start a business, including having a unique idea, designing a career that has the flexibility to grow with you, working toward financial independence, and investing in yourself — it’s no wonder that small businesses are everywhere.
Here are 10 steps that are required to start a company successfully. Take one step at a time, and you’ll be on your way to successful ownership.
Step 1: Do Your Research
Most likely you have already identified an idea, so now it’s time to balance it with a little reality. Does your idea have the potential to succeed? You will need to run your idea through a validation process before you go any further.
In order for a any company to be successful, it must solve a problem, fulfill a need or offer something the market wants.
There are a number of ways you can identify this need, including research, focus groups, and even trial and error. As you explore the market, some of the questions you should answer include:
- Is there a need for your anticipated products/services?
- Who needs it?
- Are there other companies offering similar products/services now?
- What is the competition like?
- How will your business fit into the market?
Step 2: Make a Plan
You need a plan in order to make your idea a reality. A business plan is a blueprint that will guide your company from the start-up phase through establishment and eventually long term growth, and it is a must-have for all new enterprises.
The good news is that there are different types of plans for different types of businesses.
If you intend to seek financial support from an investor or financial institution, a traditional plan is a must. This type of plan is generally long and thorough and has a common set of sections that investors and banks look for when they are validating your idea.
If you don’t anticipate seeking financial support, a simple one-page plan can give you clarity about what you hope to achieve and how you plan to do it. In fact, you can even create a working plan on the back of a napkin, and improve it over time. Some kind of plan in writing is always better than nothing.
Step 3: Plan Your Finances
Starting a your company doesn’t have to require a lot of money, but it will involve some initial investment as well as the ability to cover ongoing expenses before you are turning a profit. Put together a spreadsheet that estimates the one-time startup costs (licenses and permits, equipment, legal fees, insurance, branding, market research, inventory, trademarking, grand opening events, property leases, etc.), as well as what you anticipate you will need to keep your company running for at least 12 months (rent, utilities, marketing and advertising, production, supplies, travel expenses, employee salaries, your own salary, etc.).
Those numbers combined is the initial investment you will need.
Now that you have a rough number in mind, there are a number of ways you can fund your small business, including:
You can also attempt to get your company off the ground by bootstrapping, using as little capital as necessary to start your venture. You may find that a combination of the paths listed above work best. The goal here, though, is to work through the options and create a plan for setting up the capital you need to get your start up off the ground.
Step 4: Choose the right typr of company
Your company can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The entity you choose will impact many factors from your name, to your liability, to how you file your taxes.
Step 5: Pick and Register Your Company Name
Your Company name plays a role in almost every aspect of your business, so you want it to be a good one. Make sure you think through all of the potential implications as you explore your options and choose your company name.
Once you have chosen a name for your company, you will need to check if it’s trademarked or currently in use. Then, you will need to register it. A sole proprietor must register their company name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically register their company name when the formation paperwork is filed.
Step 6: Get Licenses and Permits
Paperwork is a part of the process when you start your own business.
There are a variety of licenses and permits that may apply to your situation, depending on the type of business you are starting and where you are located. You will need to research what licenses and permits apply to your company during the start-up process.
Step 7: Choose Your Accounting System
Small businesses run most effectively when there are systems in place. One of the most important systems for a company is an accounting system.
Your accounting system is necessary in order to create and manage your budget, set your rates and prices, conduct business with others, and file your taxes. Fastax has the experience to handle all of your accounting needs.
Step 8: Set Up Your Location
You will need to think about your location, equipment, and overall setup, and make sure your location works for the type of operations you will be doing. You will also need to consider if it makes more sense to buy or lease your commercial space.
Step 9: Get Your Team Ready
If you will be hiring employees, now is the time to start the process. Make sure you take the time to outline the positions you need to fill, and the job responsibilities that are part of each position. The Small Business Administration has an excellent guide to hiring your first employee that is useful for new owners.
If you are not hiring employees, but instead outsourcing work to independent contractors, now is the time to work with an attorney to get your independent contractor agreement in place and start your search.
Step 10: Promote Your Small Business
Once your company is up and running, you need to start attracting clients and customers. You’ll want to start with the basics by writing a unique selling proposition (USP) and creating a marketing plan. Then, explore as many marketing ideas as possible so you can decide how to promote your operation most effectively.
Once you have completed these start-up activities, you will have all of the most important bases covered. Keep in mind that success doesn’t happen overnight. But use the plan you’ve created to consistently work on your business, and you will increase your chance for success.