Learn about the key steps and knowledge needed to start a new venture.
Building a business is exciting, and one of the most creative endeavors one can embark on. However, it also requires careful research and planning. Understanding the fundamentals of business planning, funding, marketing, and legal issues are important aspects to developing any business. To get you started, we have broken down the key steps to starting a business in the guide below, with links to additional information to help you dive even deeper.
Key Steps To Starting a Business
1. Define the vision for your business
What will be the mission of your business? What do you aim to achieve? Why are you starting this venture and what will be your guiding compass? In a couple of paragraphs, define the goals for your business and why you are launching this endeavor. This will help ground your future decisions in your mission.
2. Do market research
Regardless what type of business you are starting, you want to have confidence that your product or service will have a market to generate sustainable income. This even applies to nonprofits or social-impact driven businesses. They need to ensure that their services will provide value to those they work with, and also that they have identified sustainable forms of income or funding over time. Every type of business can benefit from performing market research.
A good way to start with this is to determine your unique value proposition - what sets you apart from other competitors doing similar things in a similar market? Research your competitors, and also talk to potential customers to gauge their response to your product or service. You need a clear understanding of your value proposition and the market you are trying to enter. These steps will help you understand your market opportunity, and also define your target customer(s).
3. Create a business plan or business model canvas
While daunting to think about for some, 70% of business owners recommend writing a business plan or business model canvas when starting out. Both of these planning tools can help you map out critical elements of how your business will succeed. In fact, effective plans even include some of the steps we already mentioned above!
Effective business plans or business models include details such as a business description, market analysis, competitor analysis, marketing plan, team and management structure, and financial projections. There is a ton of advice out there to help with this process, and even free counseling you can access through your local Small Business Development Center, for example.
4. Determine your business or organizational structure
There are many different legal business structures one can choose when forming a new business. Some of the common options range from sole proprietorship, general partnership, LLC, corporation, and nonprofit. They all have various pros and cons, especially as it relates to how your business is taxed and its legal liabilities.
Educating yourself about the basics of each and determining what is right for you is important. It will help you move forward confidently with many other aspects of your business ranging from taxes, business registration, legal obligations, and more.
5. Evaluate your startup costs and finances
Starting a business, no matter how big or small, will likely come with some form of start up cost at the outset. Start by evaluating the costs associated with launching your business. This might include software, equipment, studio space, licenses, registration fees, raw materials, and more.
Once you have a sense of your early costs, determine how you will fund those costs before earning steady revenue. There are many possible options for this including personal savings, micro loans, personal loans, crowdfunding, grants, and more. Startups that have hopes of seeking outside investment in exchange for company equity may even look into venture capital or angel investment options for funding.
6. Register your business
The rules for registering your business will vary depending on your business structure, location, and exact type of business operations. Some business structures may be required to register with the state, while others may only need to register with the local city or town. Checking with your Secretary of State’s office is often a good starting point to learn more about your local requirements.
Beyond registering the business, you may also need to apply for licenses and permits, depending on the type of business you plan to operate. Again, this is usually dependent on local laws, so check with your state or local government to learn more.
7. Consider getting an Employer Identification Number (EIN)
An EIN is like a social security number for your business. It identifies your business to the federal government and allows you to easily pay federal taxes. Applying is free and can be done online through the IRS. An EIN is needed if you want to open a business bank account, which is a nice way to separate your personal and business finances.
You also may want to explore how to get a State Tax ID. The process for this is similar, but varies depending on the state.
8. Explore accounting options
All types of businesses involve money coming in and going out. You will need to track your revenue and expenses, as well as practice good bookkeeping to assist with filing taxes or preparing financial statements. You also may need to produce invoices, track inventory, and other logistical details.
There are many options that can help with these aspects of running a business. You might consider working with a Certified Public Accountant (CPA), though this would involve a cost. There are also numerous subscription software options that help freelancers and small businesses with their accounting needs such as Quickbooks, Fiverr Workspace, or Wave Apps.
9. Get familiar with contracts
For many businesses, utilizing contracts will be a necessary aspect of operations. This is especially true for freelancers or those who are offering design services to clients. Using contracts for business agreements is a critical way to protect your business, as well as those you work with.
You don’t need to be a lawyer to make a contract. Contracts can be written in simple language. What is most important is that they clearly outline the responsibilities of all parties and the scope of the work involved. There are many contract templates and examples out there, but be sure to use contracts that are personalized and work best for you.
10. Market your business to attract clients/customers
In order to be successful, people need to be able to find your business or organization! This is where marketing comes in. There are many different forms of marketing, and no one approach is inherently better than others. You should consider what will work best for your business. Explore options such as social media, print advertising, direct mail, guerilla marketing, and even full-service marketing agencies.
As a starting point, you’ll almost certainly want to create a website. This can act as your business’ home base, and much of your marketing will likely lead back to your site. You’ll also want to create a marketing plan that maps out how you aim to reach your customers and build awareness for your brand.