How to Start a Business in 15 Steps
This post was last updated on June 8, 2021.
When it comes to starting a business, you’ve got to learn how to navigate an ecosystem of multi-layered tasks with remarkable precision. From forming an idea to creating a website and promoting your brand, there are several essential steps for launching your venture.
Though this may seem like a lot to take on, outlining your strategy ahead of time will help you tackle challenges as they come and progress smoothly toward your goals. For this reason, I’ve put together a comprehensive guide on everything you need to know about how to start a business to help you begin this transformative experience.
How to start a business
Are you ready to start a business?
Before you launch your business, take a moment and make sure you’re fully prepared to begin this process.
Throughout life, you may have already flirted with the idea of becoming an entrepreneur, whether as a youth testing an early business idea, or as your present-day self creating stepping stones to reach the next level. Starting a business is attractive because it means achieving personal growth, pursuing long-awaited goals, developing new skills and overcoming challenges.
While there are many benefits to starting a business, you also need to be prepared for the realities that may follow. Even the world’s top entrepreneurs experience hard times, becoming valuable lessons for the rest of us. That’s why I want you to truly feel equipped before beginning the journey.
Here’s six signs that show you’re ready:
You’re passionate about the new venture
Like love that drives romantic relationships, being passionate about your business translates to one thing: an inclusive desire to see it succeed. Make sure you’re excited about your new idea, as this will help you push through any obstacles along the way.
You truly believe in your idea
There’ll be moments when it feels like no one else understands how important your business idea really is. But you've got to be a firm believer in your product or service in order to keep going and not let anything or anyone hold you back.
You’re prepared to face the fear of failure
About 20% of small businesses fail within the first year, found the Bureau of Labor Statistics, as reported by Fundera. This is a more slightly positive statistic than one might imagine, as 80% will continue into their second year. That said, having a plan for your business is one of the best ways to overcome the risk of failure.
You’re ready to keep learning
Starting a business sounds pretty good when you think about how you’ll finally get to be your own boss. But becoming the gatekeeper of the entire enterprise shouldn’t deter you from learning anything new again. Rather, you’ll see that there is always more work to be done, so spend the time to research and learn about all aspects of your industry.
You’re able to secure financing
Whether you’ve anticipated and saved money for this life-changing moment or are qualified to get a small business loan, the biggest part of running a business long-term is securing cash flow. With a solid financial plan in place, you can reach for the stars. Perhaps you’ll want to schedule a free consultation with a local financial advisor for further insight. Seeking out experts to help you with this stage is crucial.
You can manage your own time
When you start your own business, you’ve got to wear many hats. With all the multitasking you have to juggle, it may feel like there aren’t enough hours in the day to actually get everything done. Planning your week ahead helps you organize your work better, and with these time management tips, you'll make starting a business go much smoother.
01. Brainstorm and refine your business idea
Having a great business idea is the reason why you decided to strike out on your own and start a business in the first place. The eureka effect gives us adrenaline and makes us feel like we might be part of something bigger than ourselves.
Still, keep in mind that most ideas require money, time and may even come with potential risk. You’ll need to refine and test your idea to make sure it’s a viable option. If you’re concerned about the cash, explore these examples of low-budget online business ideas that you can start right away.
Business idea examples
Open a dropshipping business
When considering how to start a business on a budget, dropshipping is a great way to go. That’s because it's a type of retail fulfillment that lets you sell products without needing to manage your own inventory. In other words, your main job will be to market the products and make sales. The rest will be taken care of by third-party suppliers. If you’re interested in having a dropshipping business, start by connecting with dropshipping suppliers and choosing your products. Next, add those items to your online store so that customers can purchase online. Once they check out, you’ll forward the purchasing information to the supplier, who will then ship and fulfill the order. With dropshipping, the most important thing to figure out is what to sell. There are people who might advise you to sell what you know, but I believe the secret to sales success is selling products that you love. This will result in keeping both you and your clients positively engaged with your business.
Sell print on demand items Starting a print on demand business involves working with a supplier who’ll take your own designs, print them on blank items, such as t-shirts and mugs, and ship the orders. This is a great way to put your own spin on everyday products and sell them online. For artists and designers, it’s a viable way to start monetizing your creativity.
You can also use print on demand to expand on existing business ideas. For instance, if you start an online business, you can sell company gear with your own logo side-by-side your main products. This is yet another idea for making money online, and can help you strengthen your brand identity.
Offer professional services
There are two sides of a business coin - products and services. If you opt to start a service business rather than selling products, you’ll essentially be monetizing your talents and expertise.
Begin by choosing a service business idea - this could be a fitness trainer, copywriter, life coach or carpenter - and then, create a service website to sell your offerings. You can even let clients book directly through your site using an online scheduling software.
Define your purpose
Are you inspired by these examples? I suggest you take a step back to pause and consider the motivation behind your choice. While it’s always good to know what you want to launch and for whom, it’s equally important to ask yourself why you should.
To start, here’s a question for you to answer now, “Is your idea serving a personal or marketplace purpose?” While it’s important to choose an idea that’s in line with your passions, it’s also crucial that there’s market demand for your product or service. In order for your business idea to thrive, you must think of it in terms of scalability and long-term need for it by those of your target market.
Test it out
Before moving forward with your business idea, you’ll want to validate it by trying it out in the real world. This can involve anything from focus groups to information-gathering surveys and interviews.
Another strategy is to build a landing page for your target audience and to see whether you get any clicks. This is not only low-cost, but can also help you measure consumer demand in your marketplace and generate interest in your product idea.
If you find that your idea doesn’t pique the interest of prospective clients, it’s time to reassess other choices. Consider how you can refine and refresh your idea to bring something new to the table, or how you can adapt it to more directly address consumer needs.
02. Pick a business name
Feeling satisfied with your business idea? The next step is to come up with a business name.
This is one of the most crucial and potentially challenging steps of starting a business. First, your business’s name will show up wherever your business goes, influencing your marketing and branding efforts down the line. Second, the right name will create a stronger first impression on potential clients.
Now that I’ve elevated the importance of getting the business name right, I’d also like to help ease your mind with these tried and tested methods for finding yours:
Use a business name generator
A business name generator can help you brainstorm some initial ideas. Think of a word or two that best describes your venture, and then type it into the tool. During this step, I advise you to use descriptive terms that communicate what you want your business to represent, such as “fast,” “bright” or “innovative.”
Afterwards, you can narrow down the choices by performing some market research and seeing what competitors are naming themselves. This will help you assess the overall personality and tone of other brands in your industry.
Make it memorable
“Unforgettable, that's what you are…” sang the great Nat King Cole. I’d say this powerful opener can also inspire budding entrepreneurs to develop a business name that leaves an indelible imprint on the mind. The key is to make it short and simple, so that customers won’t forget who you are and will remember how to find you.
Pick a name that’s scalable
I don’t believe in fortune tellers, but there’s a method for choosing a name that can actually grow with your business. You need to consider all the potential pathways your business could take in the near future. This may mean a change in geographic location, niche or product offering. Then, you might realize that naming your business after a place, specificity or product type could potentially limit you when you want to expand. While your name should be specific enough to reflect your brand, it shouldn’t be so specific as to restrict your offering.
Tell your story
Stories express universal ideas that others can relate to, helping form bonds between people. In the same line, incorporating your brand story into your business name can stir certain emotions in your audience, thereby attracting customers. The iconic Irish Spring deodorant soap, for example, has a business name that evokes the scene of an idyllic Irish village or forest. While the company was originally launched in Germany, its name - and the story it evokes - inspires consumers to buy the product.
Check that it’s available
Business owners need to think about the legal issues of their company name. You’ll need to make sure that no one else has registered your desired business name, which you can check by doing a quick search on the US Trademark Electronic Search System. Taking this step will let you see if any trademark has already been registered for another business or related products or services.
There’s also another point to consider when checking the availability of your business name: eventually, you’ll want to build a website for your business. Because your domain name (also known as your online address) will most likely be the same as your business name, you’ll need to make sure it’s available. To check the domain availability of your business name, do a domain name search. For more information on creating a website and choosing a domain name, read through the section below.
03. Create a professional website
With more people online than ever before, having a strong website is an absolute must for starting a business. Likewise, prospective clients, investors and partners are going to check out your website, so it’s an opportunity for you to build a strong first impression of your brand. With this mind, take a look at these small business website design tips to guide you:
Find a business website template
Begin building your site by choosing a professionally designed business website template and customizing it to meet your needs and cater to your customers. From technology and real estate to finance and law, browse through the different categories of templates for your business. Consider what you want your website to express and how the layout will serve your business’s goals. For inspiration, check out the best business websites of the past year.
Choose a web host and domain name
After you’ve tweaked and customized your template, you’re ready to move on to the next step: flip the switch on your website so that it’s visible to the public. This is a two-fold process.
First, you’ll need to pick a web hosting provider. Basically, this is just a tool that stores your website’s files so that they’re viewable online. Wix is the leading web hosting platform for small businesses, and it offers free website hosting that’s protected and reliable, with 24/7 security monitoring and integrated SSL certificates to keep your users safe.
Once you’ve selected a web host, you’ll need to connect your registered domain to a hosting server. It will take a matter of minutes, but rest assured that when you purchase your website domain with Wix, you’ll also gain access to domain security and full customer support.
Optimize for SEO
When it comes to starting a business online, it’s essential to have some basic knowledge of SEO. Also known as search engine optimization, this practice is essential for boosting traffic to your site. That’s why businesses allocate on average 41% of their marketing budget to SEO, according to a recent report.
Before we can cover the basics of building an effective SEO strategy for your business, here’s a refresher of what SEO actually is. It is the process of optimizing web content to improve your site’s ranking for searches of specific keywords. For example, if you sell organic baby items, you want to integrate exact phrases, like “eco baby” and “natural baby,” into your site content. This improves your chances of showing up on Google when people type those phrases into the search bar.
While you should tap into your industry lexicon for ideas, or work with a keyword research tool for search terms to incorporate into your web content, you should also include these elements in your SEO strategy:
Speed: Page load speed is a ranking factor. It has a direct impact on your site’s position in search engine results. Your site pages need to fully load or display in a matter of seconds. You can also improve your website speed by optimizing image sizes and not burden your web pages with too much content to load.
Meta description: This is the short summary of your site that shows up below your URL in search results. You’ll want to optimize your meta description with keywords, just as you do for your website copy. In turn, this can improve the click-through rate of your website and increase your chances of ranking higher in search engine results.
Once you have a better grasp of your web traffic, you’ll be able to make the best decisions for the upkeep of your small business website.
04. Conduct market research
Data has shown that 42% of businesses fail because there is no market need. To prevent this, you’ll need to have a clear understanding of how and where your business idea fits in the market.
This begins with thorough market research on everything from potential customers to industry-related stats and reports. Essentially, this specialized research combines consumer behavior and market trends. There are two sets of research: primary and secondary.
Primary research is the direct study of your target market by researching them first-hand, such as by conducting user interviews or holding focus groups. You’ll want to define who your customers are and further segment your market by age, location, language, spending power or even stage of life (for example, college students, newlyweds or retirees). This will help you identify and analyze the characteristics within your client base for the development of your overall business strategy.
Secondary research consists of gathering information from external sources. Conducting an online search or turning to public documents and commercial research agencies, like the US Bureau of Labor Statistics are good starting points. Down the line, you might also find internal data just as useful. You can turn to your own sales reports and see what trends took off right under your nose.
05. Write up a business plan
Another essential step when starting a business is to come up with an organized plan. At its core, a business plan is a document that serves as a roadmap for how to structure, operate and manage your new venture. It also helps attract potential partners, investors and banks. Using a business plan template is an effective way to organize and streamline your ideas on paper. Here are some essential components to include:
Executive summary: This is a high-level view of your business proposal or concept. If you were to give a professional elevator pitch (explaining your business in about a minute) you’d be reciting this bit aloud.
Mission statement: This is a brief description of your company’s purpose, including its core values and goals. It’s important to note that an effective mission statement should differentiate your company from your competitors. Just take a look at these famous mission statement examples in which the potency of each one is due to its ability to stand out against the rest.
Industry analysis: This section consists of research about your industry, such as small business trends and growth. When writing this section, think about how large your industry is and how it’s expected to evolve. You should also consider who your competitors are, and make note of their strengths and weaknesses.
Customer analysis: Next, focus on your target audience and ask yourself how you plan to reach them. Clearly state the needs of your customers and specify how your product or service will meet them.
Financial projections: This portion of your business plan will track how much money is coming in and out down the road. Investors want to see hard numbers to justify their risk. Include a sales forecast (based on industry and market trends), expenses, an estimated cash flow (derived from your sales forecast and expenses), and expected profits or losses.
Operational plan: Finally, wrap up with an action plan. If you have a team, write down how each member will contribute to achieving your company’s SMART goals and objectives. Answer questions like Is there a timeline? and What are the milestones you wish to accomplish? For both, think in terms of years and quarters.
06. Build a pitch deck
A pitch deck is a brief presentation that helps potential investors learn more about your business and the ‘what, why and how’ that it entails. This is an important strategy to adapt for anyone starting a business since on average, investors spend 3 minutes and 44 seconds on any pitch deck they receive, according to startup and fundraising research.
A best practice for nailing yours is to create compelling content - both written and visual - so every bit of information is clear and straightforward to follow. Optimize your pitch deck using these tips:
Show passion for your business:. Start by telling an interesting story that shows your commitment to the cause prompted by your business idea. Then, let them know how your passion has not only helped you come up with the idea, but that when you put your heart into something, it will shine through.
Resolve one problem: Explain how your product or service will close a gap or fix an issue in the current market. Convince prospective investors that your business will bring value to customers over time.
Use data-driven content: This will help you establish credibility and will show that you’re creating your product or service with a deep understanding of your market’s needs.
Be consistent with font size, color and layout: Your slides should look professional, reflect your corporate identity, and be thoughtfully planned out.
07. Choose a legal structure
It’s time to talk about which legal structure is best for your business. Subject to geographic location, a great place to start is by reviewing the options via the US Small Business Administration’s business structure breakdown. If you’re in the European Union, you should read about setting up a European company.
The most common types of businesses in both the U.S. and abroad include:
Sole Proprietorship - This refers to a business owned by one individual, who assumes all of its legal responsibility.
Partnership - The formal agreement between two or more partners who work together toward a common goal.
Corporations - An organization legally considered to act as a single entity. Some examples include Amazon, Apple and IBM. Note that there are different types of corporations with varying legal implications, including C corps, S corps, B corps, close corporations and cooperatives.
Limited Liability Company (LLC) - A hybrid between a corporation and a partnership. In this type of business, owners have limited liability but are also pass-through entities like partnerships.
While there are different flavors of legal structures, choosing which one will best serve your needs is based on multiple factors, such as how much personal liability you want to have, tax expenses, and business registration requirements. For example, a sole proprietorship is the easiest to file, but has the most personal liability. LLCs relieve you of many personal liabilities, but come with expensive tax payments.
Do your research, and compare and contrast the advantages and disadvantages of the different business structures to find the right fit for you. And remember that a lawyer can also help with the process.
08. Secure capital and cash flow
At this point in the game, you should be talking more explicitly about how to raise money for your business. You’ll need both sufficient capital and reliable cash flow to get your business off the ground.
From applying for grants and loans to reaching out to an angel investor or setting up a fundraising campaign, there are many different strategies here. Here are a few good ways to raise money:
Applying for a small business grant. The biggest benefit of using grant money is that you won’t have to pay it back. A good place to begin looking for grants and eligibility is on the government’s SBA grants program. Alternatively, you can check out private institutions that offer small business grants, including FedEx, the Street Shares Veteran Award and Nav’s grant contest.
Setting up a crowdfunding campaign. This is a fast and easy way to share your ideas on a wide scale, get feedback and raise money at the same time. When choosing from one of the many crowdfunding sites, consider the fees, terms and conditions of each, as well as the kind of audience they typically draw.
Bootstrapping. In some cases, investing your own money may outweigh the challenges of having to depend on outsiders. To reduce your own costs and finance risks, you’ll want to minimize external resources and cut back wherever possible.
Taking out a loan. Small businesses can apply to banks and other financial institutions for loans. But first, you should know how much you need and have good reasons for it. Using the financial projections of your business plan, you can estimate an amount and know the type of loan you need.
Finding an angel investor. Often, angel investors are found through mutual contacts and even family. That said, there are hundreds of other active high-net worth individuals who seed startups with their personal money, particularly in their early stages. You can check out AngelList, Golden Seeds LLC (New York City), Investor’s Circle (San Francisco) or Tech Coast Angels (Los Angeles) - just some examples of angel investing firms online.
09. Check out competitors
As you start your business, you’ll also need to analyze your competition. Conducting competitive research helps you learn more about the market, improve your outreach to potential customers, understand what others are offering and forecast industry trends. It will also help you predict how others will perceive you and even make improvements for your own venture. Most importantly, you’ll learn what other companies did right and which mistakes to avoid.
Begin with a SWOT analysis, which is a powerful way to measure and evaluate your competitors’ overall performance. To do this, create a table with four quadrants, where you'll rank your and your competitors' strengths, weaknesses, opportunities and threats.
Strengths: Identify the areas where your business is doing well. Then, turn to your competitors and ask yourself, “How can I do what they do, but better?” Look at the features they offer to help you understand what draws their customers to them, and use this as inspiration to improve your own business strategy.
Weaknesses: Be honest with yourself here. Answer this question as directly as you can: “What do customers often complain about or dislike?” This will let you narrow in on one topic at a time, as opposed to tackling something abstract like, “What is wrong within my company?”
Opportunities: Think about your business in terms of growth. Consider different ways to tap into new spaces, like running seasonal events, green initiatives and testing out trends.
Threats: Be cautious of any external factors that can affect your business in a negative way. It can range from market fluctuations to consumers who no longer express interest in your offerings.
10. Brand your business
Building a brand for your startup is such an important part of starting a business. In a nutshell, branding is about creating a consistent voice, identity and values for your company and everything that goes into it, such as logos, websites, products or services and more. This helps your business stand out in a saturated market and builds recognition among your target audience.
Here are some of the most important branding assets to consider:
Your logo will be one of the most memorable parts of your business. As the face of your company, it needs to truly represent you and your values. When you create your own logo, make it unique, identifiable and use images and colors that convey the right message or feeling to your audience.
In the digital age, why do we still need business cards? Well, it’s still faster to hand someone a business card than email them your details. The ease, mobility and accessibility in which you can transmit valuable information on paper is an option you want around in any scenario.
When creating a business card using a business card marker, you also get everything you need to further develop your own brand. You can customize the font, colors and images, giving you full control over your business card design.
Having a business email sends a strong signal to your online customers that you are an established brand. When they see your business email they are also able to easily identify your company, thus strengthening your credibility and brand awareness.
Creating a business email takes just a handful of steps. Once you've gotten set up, every single newsletter or purchase confirmation email you send out to clients will help boost your reputation as a professional entity.
11. Make your business official
Before you take your business out into the world, you’ll also need to complete all the legal and formal paperwork. If you’re establishing a business in the US, your location and business structure will determine the steps you’ll need to take to register a business name.
Keep in mind that the benefits of registering your business include personal liability protection, legal and trademark protection and tax benefits - all of which are crucial to the prosperity and expansion of any entrepreneurial operation.
Meanwhile, for those who are seeking to set up a business in the UK or EU, it's essential to familiarize yourself with the different requirements and rules for registering a business, relevant certifications, and VAT.
12. Apply for tax IDs, licenses and permits
As a registered US business, you’re going to need to obtain your federal and state tax ID numbers, known as your Employer Identification Number (EIN). This is how your business is recognized by the government when it comes to paying taxes on both the state and federal level. Furthermore, you’ll need a tax ID number to hire employees, open a bank account and apply for relevant licenses and permits.
Applying for an EIN is free and you can do so with the IRS assistance tool to help guide you through all the questions. Taxes vary by state, so visit your state’s website to check whether you need to get a state tax ID number in order to pay taxes.
It's also important that you check your local government site to see what types of licenses and permits you might need to apply for. If your company’s activities are regulated by a federal agency, such as the case if you sell alcoholic beverages or broadcast on a public radio station, you’ll need to sign up for one. You can review this list of business requirements for federal licenses and permits for more information.
13. Set up an accounting system
Having an accounting system in place will help you organize and keep a meticulous record of what you own and owe. With a bank account, you will be able to accept payments and pay your creditors. Depending on the type of business structure you choose, you might be required to set up a business bank account that’s separate from your personal one.
You’ll also need to regulate your finances through budgeting and manage your income and expenses in order to pay your obligatory taxes. To learn how to do so, turn to this guide to small business accounting, which includes everything from creating financial statements to setting up payroll services.
14. Building a team
Unless you plan to be a team of one, you’re most likely going to want to bring in a business partner. After all, having another person to bounce ideas off of will help you along the way. Look for a partner with strengths that complete yours in order to fill in the missing pieces of the puzzle.
The same concept can be applied to employees. Unless you have a very small-scale business and want to be a solopreneur, it’s going to be quite difficult for you to play multiple roles. These include being an accountant, head of marketing, software engineer, and so many other important positions. Even if you decide not to hire in-house, you may find yourself needing extra assistance from a freelancer or independent contractor.
When you begin the hiring process, it’s important to factor in your budget, needs, and the company culture you want to portray. Creating a well-defined vision statement and outlining your business goals ahead of time will help you hire the right people to fulfill them.