How To Start A Business In 10 Steps (2024 Guide)
- Overview of starting a business in 10 steps.
- Step 1: Conduct Market Research
- Importance of market research.
- Gathering information about potential customers and competitors.
- Finding a competitive advantage.
- Step 2: Determine Your Business Concept
- Considerations for a viable and profitable business idea.
- Questions to ask yourself to generate or refine your business idea.
- What Kind of Business Should You Start?
- Factors to consider before choosing a business type.
- Questions related to funding, time investment, working preferences, interests, and skills.
- Step 4: Consider Popular Business Ideas
- Suggestions for popular business ideas.
- Step 5: Write Your Business Plan
- Importance of a business plan.
- Sections to include: executive summary, company description, market analysis, organization and structure, mission and goals, products or services, background summary, marketing plan, and financial plan.
- Step 6: Choose Your Business Structure
- Definition and importance of a business structure.
- Types of business structures (sole proprietorship, partnership, limited company).
- Step 7: Register Your Business and Get Licenses
- Legal considerations when starting a business.
- Choosing a business name and filing for a DBA if necessary.
- Step 8: Get Your Finances in Order
- Opening a business bank account.
- Hiring a bookkeeper or using accounting software.
- Funding your business.
- Step 9: Apply for Business Insurance
- Importance of business insurance.
- Types of coverage (liability, property, business interruption, product liability, employee practices liability, workers’ compensation).
- Step 10: Market Your Business
- Creating a website.
- Optimizing for SEO.
- Developing a social media strategy.
- Getting listed in online directories.
- Step 11: Scale Your Business
- Growing customer base and revenue.
- Automating and outsourcing tasks.
- Monitoring finances.
- Build a Team
- Delegating tasks as the business grows.
- Resources for building a team (hiring platforms, job boards, social media, freelance platforms).
- Considerations for partnerships.
- Bottom Line
- Recap of key points.
- Emphasis on perseverance and staying focused.
- Summary and encouragement for aspiring entrepreneurs.
A business plan is a document that outlines your business’s financial goals and explains how you’ll achieve them. A strong, detailed plan will provide a road map for the business’s next three to five years, and you can share it with potential investors, lenders, or other important partners.
1. Conduct market research
Market research will tell you if there’s an opportunity to turn your idea into a successful business. It’s a way to gather information about potential customers and businesses already operating in your area. Use that information to find a competitive advantage for your business.
2. Determine your business concept
Most business advice tells you to monetize what you love, but it misses two other essential elements: it needs to be profitable and something you’re good at. For example, you may love music, but how viable is your business idea if you’re not a great singer or songwriter? Maybe you love making soap and want to open a soap shop in your small town with three close by—it won’t be easy to corner the market when you’re creating the same product as other nearby stores.
If you don’t have a firm idea of what your business will entail, ask yourself the following questions:
- What do you love to do?
- What do you hate to do?
- Can you think of something that would make those things easier?
- What are you good at?
- What do others come to you for advice about?
- If you were given ten minutes to give a five-minute speech on any topic, what would it be?
- What’s something you’ve always wanted to do, but lacked resources for?
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 also doesn’t have to be the next Scrub Daddy or Squatty Potty. Instead, you can take an existing product and improve upon it. You can also sell a digital product so there’s little overhead.
What Kind of Business Should You Start?
Before you choose the type of business to start, there are some key things to consider:
- What type of funding do you have?
- How much time do you have to invest in your business?
- Do you prefer to work from home or at an office or workshop?
- What interests and passions do you have?
- Can you sell information (such as a course), rather than a product?
- What skills or expertise do you have?
- How fast do you need to scale your business?
- What kind of support do you have to start your business?
- Are you partnering with someone else?
- Does the franchise model make more sense to you?
Consider Popular Business Ideas
Still, trying to decide what business to start? Consider one of these popular business ideas:
3. Write your business plan
Your business plan is the foundation of your business. It’s a roadmap for how to structure, run, and grow your new business. You’ll use it to convince people that working with you — or investing in your company — is a smart choice.
A business plan is a dynamic document that serves as a roadmap for establishing a new business. This document makes it simple for potential investors, financial institutions, and company management to understand and absorb. Even if you intend to self-finance, a business plan can help you flesh out your idea and spot potential problems. When writing a well-rounded business plan, include the following sections:
- Executive summary: The executive summary should be the first item in the business plan, but it should be written last. It describes the proposed new business and highlights the goals of the company and the methods to achieve them.
- Company description: The company description covers what problems your product or service solves and why your business or idea is best. For example, maybe your background is in molecular engineering, and you’ve used that background to create a new type of athletic wear—you have the proper credentials to make the best material.
- Market analysis: This section of the business plan analyzes how well a company is positioned against its competitors. The market analysis should include a target market, segmentation analysis, market size, growth rate, trends, and a competitive environment assessment.
- Organization and structure: Write about the type of business organization you expect, what risk management strategies you propose, and who will staff the management team.
- Mission and goals: This section should contain a brief mission statement and detail what the business wishes to accomplish and the steps to get there. These goals should be smart (specific, measurable, action-orientated, realistic, and time-bound).
- Products or services: This section describes how your business will operate. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, how much your products cost, who will be responsible for creating the products, how you’ll source materials, and how much they cost to make.
- Background summary: This portion of the business plan is the most time-consuming to write. Compile and summarize any data, articles, and research studies on trends that could positively and negatively affect your business or industry.
- 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.
4. Choose your business structure
A business structure refers to how a company is organized, regarding its legal status. When setting up a company, deciding on an appropriate business structure enables your company to be formally acknowledged legally and provides guidelines for how the business should be run.
What does a business structure do?
The business structure states who owns the company, how its profits are distributed, and which managers perform what tasks. It’s also necessary for tax and liability purposes, as depending on the structure of the business, the business will be taxed differently, and managers and owners will have different levels of responsibility in the event of wrongdoing or a lawsuit.
Types of business structure
In the UK, there are 3 main types of business structures. These are sole proprietorships, partnerships, and limited companies.
- Sole proprietorship
A sole proprietorship, also known as ‘sole trader’, ‘individual entrepreneurship’, or simply ‘proprietorship’, is a type of business that is owned and run by one individual. There is no legal distinction between the owner and the business. Despite its name, a sole proprietorship doesn’t necessarily mean one person works alone; the sole trader can still employ other people.
A partnership is a business structure where two or more people jointly own the company. The partners share responsibility for managing the company and any profits and losses the business generates. The income from the business is paid to partners, who can claim it on their tax returns. Unlike corporations, a partnership is not taxed separately on its profits or losses.
- Limited company
A limited company is a business structure that recognizes the business as a separate legal entity from its owners. Unlike sole proprietorships or partnerships, the liability is limited to the company, making shareholders liable only for the amount of share capital that they have subscribed to.
5. Register Your Business and Get Licenses
There are several legal issues to address when starting a business after choosing the business structure. The following is a good checklist of items to consider when establishing your business:
Choose Your Business Name
Make it memorable but not too difficult. Choose the same domain name, if available, to establish your internet presence. A business name cannot be the same as another registered company in your state, nor can it infringe on another trademark or service mark that is already registered with the United States Patent and Trademark Office (USPTO).
Business Name vs. DBA
There are business names, and then there are fictitious business names known as “Doing Business As” or DBA. You may need to file a DBA if you’re operating under a name that’s different from the legal name of your business. For example, “Mike’s Bike Shop” is doing business as “Mike’s Bikes.” The legal name of the business is “Mike’s Bike Shop,” and “Mike’s Bikes” is the DBA.
You may need to file a DBA with your state, county, or city government offices. The benefits of a DBA include:
- It can help you open a business bank account under your business name
- A DBA can be used as a “trade name” to brand your products or services
- A DBA can be used to get a business license
6. Get your finance in order
Open a Business Bank Account
Keep your business and personal finances separate. When you open a business bank account, you’ll need to provide your business name and your business tax identification number (EIN). This business bank account can be used for your business transactions, such as paying suppliers or invoicing customers. Most times, a bank will require a separate business bank account to issue a business loan or line of credit.
Hire a Bookkeeper or Get Accounting Software
If you sell a product, you need an inventory function in your accounting software to manage and track inventory. The software should have ledger and journal entries and the ability to generate financial statements.
Some software programs double as bookkeeping tools. These often include features such as check writing and managing receivables and payables. You can also use this software to track your income and expenses, generate invoices, run reports, and calculate taxes.
7. Fund Your Business
What does it mean to fund your business?
While business funding can happen in a variety of ways, its core definition is when funds are procured to start, run, and/or grow a business. There are many ways entrepreneurs can find funding for their business, from their savings or loans to business grants and investors
8. Apply for Business Insurance
You need to have insurance for your buisness, even if it’s a home-based business or you don’t have any employees. The type of insurance you need depends on your business model and what risks you face. You might need more than one type of policy, and you might need additional coverage as your business grows. In most states, workers’ compensation insurance is required by law if you have employees.
Work With an Agent To Get Insured
An insurance agent can help determine what coverages are appropriate for your business and find policies from insurers that offer the best rates. An independent insurance agent represents several different insurers, so they can shop around for the best rates and coverage options.
Basic Types of Business Insurance Coverage
- Liability insurance protects your business against third-party claims of bodily injury, property damage, and personal injury such as defamation or false advertising.
- Property insurance covers the physical assets of your business, including your office space, equipment, and inventory.
- Business interruption insurance pays for the loss of income if your business is forced to close temporarily due to a covered event such as a natural disaster.
- Product liability insurance protects against claims that your products caused bodily injury or property damage.
- Employee practices liability insurance covers claims from employees alleging discrimination, sexual harassment, or other wrongful termination.
- Workers’ compensation insurance covers medical expenses and income replacement for employees who are injured on the job.
9. Market your business
Many business owners spend so much money creating their products that there isn’t a marketing budget by the time they’ve launched. Alternatively, they’ve spent so much time developing the product that marketing is an afterthought
- Create a Website
Even if you’re a brick-and-mortar business, a web presence is essential. Creating a website doesn’t take long, either—you can have one done in as little as a weekend. You can make a standard informational website or an e-commerce site where you sell products online. If you sell products or services offline, include a page on your site where customers can find your locations and hours. Other pages to add include an “About Us” page, product or service pages, frequently asked questions (FAQs), a blog, and contact information.
- Optimize Your Site for SEO
After getting a website or e-commerce store, focus on optimizing it for search engines (SEO). This way, when a potential customer searches for specific keywords for your products, the search engine can point them to your site. SEO is a long-term strategy, so don’t expect a ton of traffic from search engines initially—even if you’re using all the right keywords.
- Create Relevant Content
Provide quality digital content on your site that makes it easy for customers to find the correct answers to their questions. Content marketing ideas include videos, customer testimonials, blog posts, and demos. Consider content marketing one of the most critical tasks on your daily to-do list. This is used in conjunction with posting on social media.
- Get Listed in Online Directories
Customers use online directories like Yelp, Google My Business, and Facebook to find local businesses. Some city halls and chambers of commerce have business directories too. Include your business in as many relevant directories as possible. You can also create listings for your business on specific directories that focus on your industry.
- Develop a Social Media Strategy
Your potential customers are using social media every day—you need to be there too. Post content that’s interesting and relevant to your audience. Use social media to drive traffic back to your website where customers can learn more about what you do and buy your products or services.
You don’t necessarily need to be on every social media platform available. However, you should have a presence on Facebook and Instagram because they offer e-commerce features that allow you to sell directly from your social media accounts. Both of these platforms have free ad training to help you market your business.
10. Scale Your Business
To scale your business, you need to grow your customer base and revenue. This can be done by expanding your marketing efforts, improving your product or service, collaborating with other creators, or adding new products or services that complement what you already offer.
Think about ways you can automate or outsource certain tasks so you can focus on scaling the business. For example, if social media marketing is taking up too much of your time, consider using a platform such as Hootsuite to help you manage your accounts more efficiently. You can also consider outsourcing the time-consumer completely.
You can also use technology to automate certain business processes, including accounting, email marketing, and lead generation. Doing this will give you more time to focus on other aspects of your business.
When scaling your business, it’s important to keep an eye on your finances and make sure you’re still profitable. If you’re not making enough money to cover your costs, you need to either reduce your expenses or find ways to increase your revenue.
Build a Team
As your business grows, you’ll need to delegate tasks and put together a team of people who can help you run the day-to-day operations. This might include hiring additional staff, contractors, or freelancers.
Resources for building a team include:
- Hiring platforms: To find the right candidates, hiring platforms, such as Indeed and Glassdoor, can help you post job descriptions, screen résumés and conduct video interviews.
- Job boards: Job boards such as Craigslist and Indeed allow you to post open positions for free.
- Social media: You can also use social media platforms such as LinkedIn and Facebook to find potential employees.
- Freelance platforms: Using Upwork, Freelancer, and Fiverr can help you find talented freelancers for one-time or short-term projects. You can also outsource certain tasks, such as customer service, social media marketing, or bookkeeping.
You might also consider partnering with other businesses in your industry. For example, if you’re a wedding planner, you could partner with a florist, photographer, catering company, or venue. This way, you can offer your customers a one-stop shop for all their wedding needs.
Another example is an e-commerce store that partners with a fulfillment center. This type of partnership can help you save money on shipping and storage costs, and it can also help you get your products to your customers faster.
To find potential partnerships, search for businesses in your industry that complement what you do. For example, if you’re a web designer, you could partner with a digital marketing agency.
You can also search for businesses that serve the same target market as you but offer different products or services. For example, if you sell women’s clothing, you could partner with a jewelry store or a hair salon.
Starting a small business takes time, effort and perseverance. But if you’re willing to put in the work, it can be a great way to achieve your dreams and goals. Be sure to do your research, create a solid business plan and pivot along the way. Once you’re operational, don’t forget to stay focused and organized so you can continue to grow your business.