How To Start A Business In 8 Steps

Starting a business is one of the most exciting and rewarding experiences you can have, but how does one begin? There are many different ways to approach starting your own business, but it’s essential to consider your business idea, how much time you have, and the amount of money you want to put into it before making any decisions. Starting your own business requires careful financial, legal and strategic planning. We’ve compiled 8 easy steps that will help you start your business on the right foot.

1. Have the Right Mindset

Overnight achievements are frequently reported in the media because they make for compelling headlines. They don't see the years of dreaming, constructing, and positioning that go into a large public launch, so it's rarely that simple. As a result, try to concentrate on your own business journey rather than comparing yourself to others.

Consistency is Key

New business owners tend to feed off their motivation initially but get frustrated when that motivation wanes. This is why it’s essential to create habits and follow routines that power you through when motivation goes away.

Take the Next Step

Some entrepreneurs jump in headfirst without looking and make things up as they go. Then there are those who get stuck in analysis paralysis and never get started. Perhaps you're a combination of the two—in which case, you're exactly where you need to be. The greatest method to reach any company or personal goal is to write out all of the steps necessary to get there. Then, in order of importance, put those stages in sequence. Some processes may take only a few minutes, while others may take several hours. The objective is to always move forward.

2. Refine Your Business Idea

Most business advice urges you to monetize something you enjoy, but it overlooks two crucial factors: it must be profitable and something you excel at. For example, you may enjoy music, but if you're not a terrific performer or songwriter, how viable is your company idea? Perhaps you enjoy manufacturing soap and want to create a soap shop in your tiny town, but there are already three nearby—it will be difficult to monopolize the market when you're producing the same product as the others.

Ask yourself the following questions if you don't have a clear understanding of what your business will entail:

What do you love to do?

What do you hate to do?

Can you think of something that would make those things easier?

These questions can lead you to an idea for your business. If you already have an idea, they might help you expand it. Once you have your idea, measure it against whether you’re good at it and if it’s profitable.

Your business idea doesn’t have to be the next Scrub Daddy or Squatty Potty. Instead, you can take an existing product and improve upon it.

3. Know Your Competitors and Market

Most entrepreneurs devote more effort on their products than to researching their competitors. When you seek for outside money, a potential lender or partner will want to know what makes you (or your business idea) stand out. If market research suggests that your product or service is oversaturated in your location, consider if you can come up with a new strategy. Consider housekeeping: instead of providing general cleaning services, you might focus on cleaning houses with pets or garage clean-ups.

Primary Research

Primary research is the first stage of any competitive study, and it comprises gathering data directly from potential customers rather than drawing conclusions based on previous data. You may find out what customers desire by using questionnaires, surveys, and interviews.

Secondary Research

When conducting secondary research, make use of existing sources of information, such as census data. Current data can be investigated, collated, and analyzed in a variety of ways to meet your goals, but it won't be as in-depth as primary research.

Conduct a SWOT Analysis

Strengths, Weaknesses, Opportunities, and Threats (SWOT) are acronyms for strengths, weaknesses, opportunities, and threats. A SWOT analysis helps you to look at the facts about how your product or idea may perform if it were to be put on the market, and it can also assist you to make judgments about where your idea should go.

4. Create Your Business Plan

A business plan is a living document that acts as a road map for starting a new company. This document is easy to grasp and absorb for possible investors, financial institutions, and firm management. Even if you plan to self-fund, a business plan can assist you in fleshing out your concept and identifying potential issues. The following sections should be included in a well-rounded business plan:

Summary of the report. Although it should be the first item in the business plan, the executive summary should be prepared last. It defines the proposed new business and emphasizes the company's objectives and techniques for achieving them.

Description of the business. The company description explains how your product or service solves problems and why your company or idea is the best. For example, if you have a background in molecular engineering and have used it to develop a new type of athletic clothing, you have the qualifications to manufacture the greatest material.

Analyze the market. This component of the business plan looks at how well a company compares to its competition. Target market, segmentation analysis, market size, growth rate, trends, and a competitive environment evaluation should all be included in the market analysis.

Organization and structure are important. Write about the type of company you envision, the risk management measures you offer, and the management team you envision. What are their credentials? Will your company be a sole proprietorship or a corporation?

Mission and objectives This part should include a succinct mission statement that explains what the company wants to achieve and how it plans to get there. These objectives should be SMART (specific, measurable, action-orientated, realistic, and time-bound).

Services or products. This section explains how your company will run. It details what items you'll give customers at the start of your firm, how they compare to existing competitors, how much your product costs, who will be in charge of creating it, how you'll acquire resources, and how much they cost to create.

A brief overview of the background. Writing this section of the business strategy takes the most time. Compile and summarize any data, articles, or research papers on trends that could effect your business or sector in a positive or bad way.

Marketing plan. The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis, and analyzes competitors. It also discusses how you’ll promote your business, how much money will be spent on marketing, and how long the campaign is expected to last.

Financial plan. The financial plan is perhaps the core of the business plan because, without money, the business will not move forward. Include a proposed budget in your financial plan along with projected financial statements, such as an income statement, a balance sheet, and a statement of cash flows. Usually, five years of projected financial statements are acceptable. This section is also where you should include your funding request if you’re looking for outside funding.

5. Choose Your Business Structure

When structuring your business, it’s essential to consider how each structure impacts the amount of taxes you owe, daily operations, and whether your personal assets are at risk.

Limited Liability Corporation (LLC): A limited accountability company (LLC) protects you from personal liability for commercial debts. LLCs can be owned by one or more individuals or businesses, and they must have a registered agent. Members are the people who own the property.

A limited liability partnership, or LLP, is comparable to an LLC but is reserved for licensed business professionals such as attorneys and accountants. A partnership agreement is required for these situations.

Sole Proprietorship: If you're starting a solo firm, a sole proprietorship can be a good option. For legal and tax reasons, the company and the owner are treated as one entity. The company's obligation is assumed by the owner. As a result, if the company fails, the owner is personally and financially liable for all of the company's debts.

Corporation: Just like an LLC, a corporation reduces your personal accountability for commercial debts. A corporation can be classified as either a C corporation or a S corporation for tax purposes. Small businesses that meet specific IRS standards can apply for S company status, which allows them to pay taxes at a lower rate. Larger firms, as well as start-ups seeking venture financing, are frequently taxed as C corporations.

Before you decide on a business structure, discuss your situation with a small business accountant, as each business type has different tax treatments that could affect your bottom line.

6. Register Your Business and Take Care of Paperwork

After you've decided on a business structure, you'll need to deal with a number of legal issues. The following is a useful checklist of things to think about while starting a business:

Choose a name for your company. Make it memorable, but not overly so. If possible, use the same domain name to develop your online presence. A business name cannot be the same as that of another firm registered in your state, nor can it infringe on a trademark or service mark that has already been registered with the US Patent and Trademark Office (USPTO).

Fill out the necessary paperwork with your state to start your business. By completing documents with your state's business agency–usually the secretary of state–you can officially form a corporation, LLC, or other business entity. You'll need to designate a registered agent to accept legal documents on your behalf as part of this process. You'll have to pay a filing fee as well. A certificate from the state will be sent to you, which you can use to apply for licenses, a tax ID number, and company bank accounts.

Fill out an application for an Employer Identification Number. A federal employment identification number is required for all firms other than sole proprietorships with no employees. Submit a tax return to the Internal Revenue Service. In most cases, you'll get your phone number within minutes.

Make an application for the licenses and permits you require. Your industry and jurisdiction decide the legal requirements. To function, most businesses require a combination of local, state, and federal permits. For license information specific to your location, contact your local government agency.

Open a bank account for your business. Separate your business and personal finances. Here's how to pick a business checking account—and why having separate accounts is so important.

Submit an application for commercial insurance. In the event of property damage, lawsuits, or other issues, you should consider purchasing general liability insurance for your company. Commercial property Insurance and product liability insurance may also be advantageous. Workers' compensation insurance is needed by law in most states if you have employees.

Consider hiring a bookkeeper or investing in accounting software. To handle and track inventory, you'll need an inventory function in your accounting software if you sell a product. Ledger and journal entries, as well as the capacity to generate financial statements, should all be included in the software.

7. Fund Your Business

There are a variety of ways to fund your business—some involve a significant amount of effort, while others are more straightforward. There are two types of funding: internal and external.

Internal funding includes:

• Personal savings
• Credit cards
• Funds from friends and family

If you finance the firm with your own money or credit cards, you'll have to pay off the credit card debt, and if the business fails, you'll lose a significant portion of your wealth. Allowing family members or friends to invest in your firm might lead to resentment and broken relationships if the company fails. External investment may be an option for business owners who seek to reduce these risks.

External funding includes:

• Small business loans
• Small business grants
• Angel investors
• Venture capital
• Crowdfunding

Small enterprises may need to draw on a variety of funding sources. Consider the amount of money required, the time it will take for the company to repay it, and your risk tolerance. Plan for profit regardless of the source you use. It's better to make six figures and keep $80,000 than to make seven figures and keep only $80,000.

8. Market Your Business

Many entrepreneurs spend so much money developing their goods that by the time they launch, they don't have a marketing budget. Alternatively, they may have spent so much time producing the product that marketing is a last-minute consideration.

Even if you have a physical location, having a website is necessary. You can create a basic informational website or an e-commerce website to sell things online.

Focus on search engine optimization after you've created a website or e-commerce store (SEO). This way, if a potential consumer types in specific terms related to your products, the search engine will direct them to your website. Even if you use all of the proper keywords, SEO is a long-term plan, so don't expect a lot of traffic from search engines straight away.

Provide high-quality digital information on your website that allows users to quickly locate the solutions to their questions. Videos, client testimonials, blog articles, and demos are all good content marketing ideas. Consider content marketing to be one of your most important daily jobs. This is used in conjunction with social media publishing.

You don't have to be on every social media platform that exists. You should, however, have a presence on Facebook and Instagram because they both include e-commerce tools that allow you to sell directly from your accounts. Both of these platforms offer free ad training to help you market your business.