How to Start a Business (In Just 10 Steps!)

Starting a business can be an exciting and rewarding endeavor, but it also involves (1) careful planning, (2) decision-making, and (3) a clear understanding of the steps involved.

And frankly, I know it can be a little scary. 

But don't worry. In this guide, I'll take you through exactly what you need to know to get a new venture off the ground.

And, of course, it starts at the grassroots:

1. Explore your business idea

The first step in starting a business is identifying a viable business idea.

This could be based on:

• Skills you've acquired or talents you have,
• Passions you've developed,
• Or even just a gap in the market.

However:

Be careful when basing a new business idea solely on your abilities or passions; there's always a chance that the market could be oversaturated, and the business might never quite kick-off.

For example, statistics show that 80-150 billion garments are made annually.

 And of those, at least 10-40% aren't sold. At a minimum, that's 8 billion garments!

Talk about oversaturation in the fashion industry.

2. Conduct market research

Did you know that of the 733,721 businesses that started in 2018, over 150,000 closed after the first year?

So, it is safe to follow that market research is paramount.

After all, you don't want to become just another statistic.

Not to scare you:

But by the fifth year, nearly 50% of the businesses that had started were shut down for good.

So, what are the elements of good market research, and how do you conduct it well? 

Let's explore this:

(a) Know your target market

Okay, the most essential step in this process is determining your target audience — your ideal customer.

Of course, you can take some preliminary steps on your own. First, ask yourself some probing questions:

1. Who does my product or service best appeal to?
2. What sort of value does my ideal customer get? Think about status, pleasure, relief, security, and other factors. Is this true of demographics outside of my expected customer basis?
3. What else does my target market like? What products or services could enhance my current value offering?
4. What are their values, fears, hopes, and aspirations?

You can continue down this road until you've constructed a clear map of your target audience and fully understood why you chose them and not others.

Proceeding this, you can then get into some practical audience research.

This might include surveys where you ask people within your target market what they think:

1. You may want to ask them about what brands come to mind when they think about your product or service.
2. You might want to ask them about positive and negative affiliations. This will help with marketing.
3. You could ask them what additional services or product features you could add to improve your service offering.

There are a lot of angles you could go about this, but at the end of the day, keep this in mind:

You want to understand the mind of your consumer.

Aside from asking friends, colleagues, or family, you could also use a platform such as SurveyMonkey or post directed questions on LinkedIn or other social media platforms.

Of course, much of the information you're looking for may already be online. So, sometimes, a simple Google search is all you'll need!

(b) Understand competitors

Off the bat, it's crucial to note:

Competitors aren't just those you directly compete with.

You could be competing with someone who offers similar products or services that could replace your own.

(Think books vs. movies)

You may also go up against a competitor who isn't competing in a similar niche but rather is competing for money spent.

Consider how a travel agent may indirectly compete with a video game company for a customer's "spending money."

There's always a lot to think about.

So don't rush to complete your competitor research — it requires much more detail than you imagine.

Here's what you should find out:

1. The unique product/service offerings of your direct competitors. Sometimes, businesses may "augment" what they offer to distinguish themselves. Find out what they're doing, and try to stay ahead.
2. What are the prices of your direct competitors? Is price something you want to compete on? Either way, understanding the relative value of what you're selling is essential. Then, it's just about establishing your business as affordable and accessible or as expensive but of a higher quality.
3. How are your indirect competitors positioning themselves in the market? How can you effectively draw their clients to your business? In short, why should they spend their hard-earned wages on what you offer?

There's a lot more research you can do; ultimately, it's about ensuring you have a detailed picture of what you're up against.

(c) Delve into industry trends

This is the most "abstract" research you're going to have to do.

So, the best way to explain this is by providing an example.

Let's say the year is 2100, and you're considering opening a food distribution company.

You've done your homework, and you completely understand your competitors.

You've also carved out a niche on paper, and you know exactly who you will sell to and why they will buy from you.

But little do you know that there's a gap even in your "secure" plan.

In the background, over the past 50 years, food science has evolved drastically.

And soon enough, nutritious foods, vegetables, and even meat-like products will be able to be grown in a lab on a mass scale.

Because of a lack of industry knowledge, you had no idea about this, so you never considered it a threat to your new business.

This hypothetical example showcases a point: you must understand industry trends.

Think about how much better cable TV could have positioned itself if it had better foreseen the customer uptake of streaming platforms such as Netflix or Hulu.

Consider this:

Major cable TV providers collectively lost 6,000,000 pay TV subscribers every year between 2019-2022.

3. Create a business plan

With your initial research out of the way, you're better prepared to start creating your business plan.

But now, the question is, what should you include in your business plan? And why should you even type one out?

Let me start with the first question —

Your business plan should include the following:

1. Executive summary: This is an overview of the business plan, highlighting the key points. It should include the business concept, financial features, financial requirements, current business position, major achievements, and prospects.
2. Company description: Provides detailed information about the business, the problem it solves or needs it fulfills, and its target market. It should also outline the competitive advantages that will make the business a success.
3. Market analysis: This section should demonstrate your knowledge about the particular industry your business is in. It should include anoutlook and description of your industry, target market information, market test results, lead times, and an evaluation of your competition.
4. Organization and management: Describes the organizational structure of your business, including details about the ownership, profiles of your management team (or just you!), and the qualifications of your board of directors (if you have a board).
5. Products or services: Here, you should describe in detail the products or services you offer or plan to offer. It should also discuss the product's life cycle, any intellectual property you may own, and research and development activities that may lead to new products or services.
6. Marketing and sales strategies: This section should detail how you plan to market your products or services. It should include information on your marketing plan and your sales strategy.
7. Funding request: If you are seeking business funding, this section should detail your funding requirements, your plans for funding, and how you plan to use the funds you receive.
8. Financial projections: You should provide a financial outlook for the business. This includes balance sheets, capital expenditure budgets, cash flow statements and forecasted income statements, three to five years. These forecasts should be supported with a set of assumptions.
9. Exit strategy: It's increasingly common to include your exit strategy—how you plan on leaving or ending the business operations, especially if seeking funding.

4. Choose a business structure

Decide on the business structure of your business. Common options include:

• Sole proprietorships: This is the simplest and most common structure chosen to start a business. It's an unincorporated business (not a separate entity) owned and run by one individual without distinction between the business and the owner.

The owner receives all profits and is responsible for all the business's debts, losses, and liabilities. 

Taxes are filed on the owner's personal tax return, and there is less paperwork and lower startup costs than other structures.

• Partnership: A partnership is a single business where two or more people share ownership.

Each partner contributes to all aspects of the business (money, property, labor, or skill) and shares in the profits and losses.

Partnerships can be either general partnerships, where all partners manage the business and assume responsibility for the partnership's debts, or limited partnerships, with one general partner and other limited partners.

• Limited liability companies (LLC): An LLC is a hybrid type of legal structure. It provides the limited liability features of a corporation and the flexibilities and tax efficiencies of a partnership.

The "members" of the LLC are protected from personal liability for business claims or debts, meaning personal assets are generally considered separate. 

An LLC can choose whether to be taxed as a corporation, partnership, or sole proprietorship. 

• Corporations: A corporation is a legal entity that is distinct from its owners, providing the most personal liability protection.

Corporations can raise capital through stock sale and are subject to more regulations than other business structures.

They're more expensive to set up and require more extensive record-keeping, operational processes, and reporting.

There are different types of corporations, including:

1. C corporations (subject to corporate income taxation).
2. S corporations (which pass corporate losses and deductions, and income and credits through to their shareholders for federal tax purposes).

So, as explained:

Each has its own legal and tax implications.

Choosing the business structure that best suits your business needs is essential.

5. Register your business

The next step for small business owners when learning how to start a business is to register it:

Choosing a business name:

If you haven't already, it's time to choose your business name:

(Though it's likely around in your business plan.)

Keep in mind that it is crucial as it reflects your brand and identity.

It should be relevant to your niche, memorable enough for customers to remember, and unique enough for customers to distinguish against other names.

Before finalizing a name, check if it's already in use or trademarked by another company.

This can be done efficiently through our trademark search engine.

Looking to register your trademark? Protect your brand today at www.trademarkia.com.

Next, you should ensure that your domain name is available for your business. 

But don't worry! You can quickly check on Domainmarkia.

Business name registration:

Once you've chosen a name, you need to register it with the relevant authorities.

Now, this process varies depending on your business structure and location.

For sole proprietorships and partnerships using a business name different from the owner's name, a "Doing Business As" (DBA) registration might be necessary.

For LLCs and corporations, the business name is usually registered when filing the formation documents.

Obtaining licenses and permits:

Different types of businesses require various licenses and permits to operate legally.

These can range from a general business license to specific permits related to your industry (like health permits for restaurants or environmental permits for construction).

Check with your local and state government offices to understand what specific licenses and permits your business needs.

This can often be done through their websites or contacting the relevant departments.

Employer identification number (EIN):

Suppose your business has employees or is structured as a corporation or partnership. In that case, you'll likely need to obtain an Employer Identification Number (EIN) from the IRS (or equivalent in your country).

This number is used for tax purposes and to identify your business in various legal and administrative matters.

Register for state and local taxes:

Depending on your location and the nature of your business, you may need to register for local and state taxes, which could include:

• Sales tax
• Use tax (tax on the use and storage of goods that weren't taxed as sales tax)
• Payroll tax

Compliance with zoning laws and regulations:

Ensure that your business location is zoned for the business activities you plan to conduct.

Non-compliance can lead to legal issues and fines.

6. Set up your finances

Phew! You've come a long way.

But keep up with me; there are just a few more steps to go before you've started your business (the right way).

Opening a business bank account:

A business bank account separates your personal finances from your business finances, which is essential for accurate bookkeeping and tax reporting.

Although you may not need to do this initially, it may become a good step in the right direction.

So, how do you go about it?

Choose a bank that meets your business needs. Consider factors like:

• Fees
• Accessibility
• Additional services

To open the account, you'll need your business registration documents, EIN (or equivalent), and other personal identification documents.

A business bank account is also more official and shows prospective clients that you "mean business."

Setting up an accounting system:

An accounting system helps track business transactions, manage invoices and expenses, and prepare financial statements.

As with a business bank account, you may not initially want or even need an elaborate accounting system. But as your business grows, it'll undoubtedly make your life much easier.

So, how do you do it?

You can choose from various options, like hiring an accountant, using accounting software (like QuickBooks, Xero, etc.), or combining both.

The choice depends on the size and complexity of your business.

It'll help keep financial data organized, making it simpler to monitor the financial health of your business.

(And ensures accuracy in reporting for tax purposes, of course!)

Planning your budget:

A budget is a financial plan that estimates future revenue and expenses. It helps in setting financial goals and making informed business decisions.

This is something you must do, regardless of the size of your business.

First:

• Identify your sources (or potential sources) of income
• Estimate your business expenses
• Plan for contingencies

Regularly review and alter your budget as your business grows and changes.

This provides a roadmap for expected income and expenditures, helps avoid overspending, and is essential for financial planning and stability.

Additional considerations:

• Implement financial controls: Establish internal controls to manage finances effectively. This includes procedures for authorizing transactions, reconciling bank statements, and auditing financial records regularly.
• Plan for cash flow management: Understand that profits don't equate to cash in hand. Effective cash flow management involves monitoring and managing the amount of cash coming in and going out.
• Consider business financing options: Be aware of your options for business financing, like loans, lines of credit, or investor funding, which can be vital for growth and expansion.
• Maintain sound financial records: Keep detailed and organized financial records. This practice is essential for tax purposes and understanding and analyzing your business's financial performance over time.

Remember, how you set up and manage your finances can significantly impact the success and sustainability of your business.

So:

It's often worth investing the time and resources to get it right from the start.

7. Create your brand identity

There are numerous elements involved in crafting the right brand identity.

While I've already gone over selecting the right name, let me go over a few more aspects of brand identity that are particularly relevant.

Develop a logo:

A logo is a visual representation of your brand. 

It's a symbol that can convey the essence of your business at a glance.

Your logo should be simple, recognizable, and scalable to work on different mediums.

You can design it yourself using design software or hire a professional graphic designer.

Bear in mind:

A well-designed logo helps establish your brand's visual identity and makes your business more easily recognizable.

Create an integrated and cohesive marketing strategy:

A marketing strategy ensures your brand communicates a consistent message across all channels.

And, of course:

It helps you effectively improve your brand reputation and knowledge, create followers, and potentially lead to conversions.

But where do you start?

Well, you've already done much of the heavy lifting, having identified your target audience.

Now, you need to find the right social media channels and traditional marketing platforms.

(And, of course, set up a website!)

But regardless of the platform you're on — ensure that you're consistent:

• Develop your brand "tone of voice" that appeals to your target market.
• Select the appropriate color schemes and typography that reflect your brand personality.
• Use similar kinds of stories to engage customers and create connections.

8. Prepare for operations

Small business owners also need to be practically prepared after adequate planning:

Setting up your business location:

Your business location can significantly impact your operation's efficiency, costs, and attractiveness to customers and employees.

So choose a location based on your business needs, considering factors like:

• Customer accessibility
• Rent and utility costs
• Local zoning laws
• The proximity to suppliers and competitors

For home-based businesses, set aside a dedicated workspace.

A well-chosen location can enhance visibility, improve operational efficiency, and contribute to a positive customer experience.

Purchasing equipment:

The right equipment is essential for your business's operational effectiveness.

List all the equipment your business will need to operate.

This can range from computers and office supplies to specialized machinery.

Consider buying or leasing options based on your budget.

The necessary equipment helps maintain productivity and provides the infrastructure needed for your business activities.

Hiring employees (if necessary):

Employees are the backbone of many businesses, contributing to growth and success.

Define the roles you need to fill and create detailed job descriptions.

Use recruitment channels like online job boards or recruitment agencies.

For once-off jobs, you may even have luck getting affordable talent online from platforms such as Upwork and Fiverr.

Establishing your supply chain:

A reliable supply chain is crucial for providing your product or service to customers without delays or quality issues.

Identify and vet suppliers, negotiate terms, and set up ordering processes.

Consider aspects like cost, reliability, and ethical practices of potential suppliers.

An efficient supply chain ensures timely delivery of goods and services, maintains quality, and reduces operational costs.

Additional considerations:

• Health and safety compliance: Ensure your workplace complies with local health and safety regulations to create a sescure environment for employees and customers.
• Business insurance: Obtain the necessary insurance policies to protect your business from risks (like liability, property damage, and workers' compensation).

Preparing for operations requires careful planning and attention to detail.

By ensuring everything is in place for smooth day-to-day operations, you lay a strong foundation for your business's success and sustainability.

9. Launch your business

Launching a business is critical in establishing your brand in the market.

This process involves strategically introducing your business to your target audience to generate interest and attract initial customers.

Here are key components to consider for a successful launch:

1. Develop a comprehensive launch plan: Your launch should be planned meticulously. This includes (a) setting clear objectives, (b) identifying your target audience, (c) defining your unique selling proposition (USP), and (d) determining the key message you want to communicate.
2. Create a marketing campaign: Develop a marketing campaign that resonates with your target audience. This could involve digital marketing (like social media, email marketing, content marketing, SEO, and online advertising) and traditional marketing methods (like radio, print, or TV commercials). Tailor your marketing materials to speak directly to your audience's needs and interests.
3. Organize a launch event: Consider hosting a launch event. This could be a physical event like an open house, a product demonstration, or a press conference. Alternatively, a virtual event like a webinar or a live stream on social media can also be effective. The goal is to generate excitement and media coverage.
4. Offer special promotions: To attract initial customers, consider offering special promotions such as discounts, free trials, bundled deals, or limited-time offers. These incentives encourage potential customers to try your product or service.
5. Leverage social media: Use social media platforms to create buzz around your launch. Teasers, countdowns, and sneak peeks of your product or service can build anticipation. Engaging with your audience through these platforms can enhance your visibility and brand recognition.
6. Collaborate with influencers or partners: Partnering with influencers or other businesses can amplify your reach. Choose partners whose audience aligns with your target market for more effective results.
7. Gather feedback: Post-launch, gathering feedback from your first customers is essential. This will help refine your product or service and improve future marketing strategies. You can use review websites or your Google business profile to gather feedback.
8. Build relationships: Focus on building long lasting relationships with your early customers. Good customer service, follow-ups, and engagement can turn initial buyers into loyal customers.
9. Measure success: Finally, measure your launch's success against the objectives you set. Analyze what worked well and what didn't to learn for future launches or marketing efforts.

A successful launch is more than just a one-time event:

It sets the stage for your ongoing marketing efforts and can significantly impact your business's future growth and reputation.

10. Monitor and adapt

Once your business is up and running, continuously monitor its performance.

Use customer feedback and financial data to make informed decisions.

Be prepared to adapt your strategy to meet market demands and overcome challenges.

Want to know how to start a business? It takes effort.

Starting your own business requires dedication, hard work, and resilience.

While the process can be challenging, thorough planning and a clear vision can lead to a successful and fulfilling venture.

Remember, every successful business starts with a first step, and with the right approach, yours can, too.