- Determine what what you are selling.
Before you can do anything else, you need a product or service to sell. This is sometimes the biggest stumbling block as to how to start a business. If you haven't already solved this first step but you know you want to start a business, how do you figure this out?
There are several ways but look at one of two things. Do you have a passion or something you love to do and can you make money at it? Or, is there something you've noticed that seems to be lacking in the market?
If you have a passion, that's a great first start. Maybe you are an expert in food and decide to open a restaurant. Or maybe you have expertise in clothing and want to start a brand. Using your passion is a great way to start.
The second way is filling a need in the market by creating a product or service that helps people save time or money.
- Research your idea
You should spend some time in this step to validate your idea and that it has a chance to be successful. You can start with simple market research. Scour the internet for similar ideas and see if they've been successful or run into obstacles. Ask family and friends. But beware: family and friends may not be the most honest and may give you the feedback you hope to get, not what you should get. The best way would be to ask random people, post a survey and get honest feedback. Of course you run the risk of someone stealing your idea, but you would have better feedback.
- Write a business plan
If your idea has passed the research phase, start writing a business plan. For those wondering how to start a business, this step tends to get missed. As a result, the time and effort is wasted because of a lack of initial focus or not understanding all that is required. This does not need to be an elaborate 50-page plan with color charts and graphs, but it should be long enough that it forces you to think about the main topics of any good business plan:
1) Product or Service. What you are selling? Provide a reasonably detailed description to help you flesh out exactly what you are providing.
2) Market Analysis. What is the market, how large is it, how does your product or service fill a need? What makes it unique? Who are your competitors?
3) Operations. How will you produce the product or provide the service. What facilities or equipment will you need?
4) Marketing. How will you promote your promote? Strictly organic traffic to a website? Facebook? LinkedIn? Magazine advertisements?
5) Finances. What will you need in startup capital to get this going? Are there large one-time expenditures needed to get started? What about daily operations after launch? Will you need to fund payroll, materials, inventory, equipment? How will you finance this? Bank loans? Family money? Credit cards?
6) Critical Risks. Be honest. What could go wrong and how will you respond?
7) Schedule of Activities. List out the major things you need to to. Give yourself dates and deadlines. This will keep you honest (business startups always take longer than you thing) and it will keep you focused on the important things you need to work on.
- Choose a location
Where will you operate? Do you need class-A office space? Retail space? Or are you starting in your basement?
- Determine a legal structure
Will you operate as a sole-proprietorship, S-corporation, C-corporation, partnership or LLC? Find a good attorney and CPA who specializes in business startups to help you with this.
- Pick a business name
The part that people can spend too much time one. The question is how important is this really? Yes, it would be nice to pick a name that is both brandable and helps potential customers understand what you do. But think of all the businesses that have seemingly meaningless name and have made it big. Spend some time but don't slave over this. You should pick a name with social media considerations, such as picking a domain name that matches the business name.
- Register for state or local taxes
If you will have employees, you will need to collect employee withholding and pay state unemployment. If you sell a product, you will likely need to collect and remit sales tax. In some states, services are taxable. Again, a good CPA will help you out here.
- Obtain business licenses and permits
Check your state, county and city/town to see if you need any special business permits or special licensing. Many states regulate a wide variety of services. Some may place regulations on where you operate. A business attorney is probably your best bet for help.
- Initial marketing
This should be part of your business plan above, but you'll need to decide the first steps in your marketing plan. Perhaps a good website is the first step as many potential customers check your digital presence before going further. Will you need business cards? Become part of networking groups? Advertise on Facebook or LinkedIn?
- Get started!
Once you have your operations down and your marketing is ready, get it started! Don't dwell on making everything perfect. You will be tweaking and changing your business for the life of the business. The worst mistake is not pushing forward.
This is a basic guide in how to start a business. Obviously there is a lot more, and more details to each of these steps. But it should be enough to get things going. And be sure to check out our Resources Page for ideas on specific products o help you in your business.
Do you have the itch to get into business for yourself? You may be wondering how to start a business and which steps to take. Hopefully, this guide on some of the key issues helps you get you on your way.