How To Start A Small Business

To start a business you need thorough planning, research, making important and timely decisions, managing your finances, and performing legal activities. You must be ready to take steps and make key decisions because markets and situations can change at any time.

Whether it is your first business startup or 10th, these steps will help you till you launch your product or service and through;

1. Refine your business idea

The first step in starting a business is to determine what type of business you want to start. Whether a particular niche you want to follow or you are going to convert your hobby into a business.

If you have found an idea to start a business, conduct research on the companies already dealing in this industry. Conduct research about their strengths, weaknesses, and overall industry opportunities.

You can come up with your own unique and innovative idea that satisfies the need of your customer. Similarly, you can look for existing businesses. Ask yourself, how you can improve these businesses and fill the gaps in the market.

This step is very important because it is a base of your whole business. Ideally, you need to come up with an idea of your interest, and make sure it also has a market need.

If you find any shortcomings or weaknesses that you can cater to and offer in the market. Then you have got a good business idea. There are a number of ideas to start a small business but make sure your idea is sellable.

2. Conduct a market research

The first step in starting a business is to figure out what you are going to offer to your customers. You must know which target market you are going to serve. You should conduct market research to know who the other players in that market are.

Market research is the technique to gather information and understand the target market of your business. It helps in identifying your target customers, their buying behavior and habits, their buying power, their buying patterns, what is the size of your target market.

Afterward, if you feel that your small business idea has got a potential and can give solid competition to other competitors then you are ready to write a business plan.

Similarly, you can also conduct a competitive analysis to find out a market advantage. Competitive analysis will help you in studying those businesses that are competing in your target market. This will help you in gaining a competitive advantage over them.

A competitive analysis is a strategy to identify key players in the market, and their strategies regarding the product, sales, and marketing. It also helps you to identify your own capabilities you can use to capture the market.    

Competitive analysis helps you to completely identify your competition, how they work, and their gaps. Through this, you can also identify where you can outperform them. It will help you to stay competitive and meet industry trends.

Read more: How To Do Market Research

Read more: How To Do Competitive Analysis

3. Write a business plan

Once you have your idea in place, it is time to write a business plan.

A business plan is a clear document of your objectives, and how you are going to achieve those objectives. It’s a clear written road map of the business’s marketing, finance, and operations. It will provide a road map of your next 3 to 5 years.

The business plan consists of three things;

  • Who are you?
  • What is your plan to do?
  • How you are going to do it?

Writing a business plan will help you in formalizing your business idea. Many businesses rush to start their business without having a proper business plan and research. Ultimately they fail or they don’t earn profits according to their real potential.

A good business plan will help you through each step of running and managing your business. Your business plan will help you by giving you a clear roadmap of how to run and grow your business. A business plan will help you in getting funds, business partners, and investors. 

Business plan outline;

  1. Write Down An Executive Summary
  2. Describe your business
  3. Define Your Business Goals
  4. Describe Your Business Products and Services
  5. Conduct A Market Research
  6. Conduct Competitive Analysis
  7. Establish Marketing & Sales Strategies
  8. Establish Your Business Financial Analysis & Projections
  9. Introduce Your Management Team
  10. Appendix & Annexes

Read more: How To Write A Business Plan

4. Select your business structure

Before registering your business, you need to find its legal business structure and what kind of legal entity it is. Selecting the right business structure will legally affect the legal and financial protection you need, your ability to raise funds, how will you file taxes, and your personal liabilities.

The common business structures are;

  • Sole proprietorship
  • Partnership
  • Corporation
  • Limited liability company

5. Register your business

Before registering your business, you need to find your business name. Market research and your own creativity will help you in finding out the right name for your business.

Choose a business name that matches your business and it should be short and memorable and align with your business mission and vision. Similarly, choose the right business structure.

After choosing it, it is better to protect it by registering it with agencies.

Then you need to register your business as a separate legal entity. It also depends on your business structure and business location. Determine these factors first. Registering a small business is very easy and it is like registering your business name with the government.

6. Fund your business through financing

Initiating a business needs money. Determining how will you bear your expenses and cover the costs. This major question will be answered by your business plan. Your business plan will tell you how much money you will need to start and run your business.

Many business startups fail because they fail to identify their business funding needs before even turning their business profitable. It is better to overestimate the costs than to underestimate them and face difficulties afterward.

Once you know how much funding you need to start and run your business. It is time to find out where and how you will get it. Capital for your startup can come from various sources;

  • Investors
  • Business loans
  • Business grants
  • Crowdfunding

7. Obtain federal and state tax ID number

Your federal and state tax ID numbers are also known as employer identification numbers (EIN). EIN is a nine-digit number. It works like a social security number for a business. It is assigned by Internal Revenue Service (IRS) to businesses for tax purposes.

You will be in need of an employer identification number if;

  • If you pay your employees
  • Your business operates as a corporation of partnerships
  • You have a partnership form of business
  • You need to open a business bank account
  • You have purchased an ongoing business or have an inherited one
  • Your business has a retirement plan for your employees

EIN will benefit you in;

  • Filing your taxes
  • giving you legal protection
  • establishing credit

State tax ID is assigned by state. Each state has different requirements, regulations, and tax laws. The laws of states vary from each other.

8. Open a business bank account and obtain a business credit card

Open a business bank account when you feel you are ready to receive and send money. The business bank account will help you stay legally protected. It will help your customers and employees with online payments.

The business bank account will help you in managing your accounts and finances, pay taxes on time and protect yourself.

9. Get business licenses and permits

For a small business, you will need a combination of licenses and permits from federal and state agencies. Requirements and fees can be different on the basis of your business location, activities, and government rules.

Once before starting your business, take a look at what type of licenses and permits you are required to operate. It is good to consult a small business lawyer to avoid any trouble before starting your business legally.

10. Obtain business insurance

Obtaining business insurance is a very important step before launching your business. Laws and requirements of insurance vary among states. Your business needs to be protected from any property damage, theft, or customer lawsuit.

There are different types of insurance that you can purchase, depending on your location and business type.

11. Choose your vendors/ suppliers

Any business cannot run without its vendors/ suppliers. There are third-party vendors that supply you with the raw material or whatever you need to run your business. These vendors help you in running your business. Different businesses require different vendors.

Choose carefully when you are choosing your vendors. It is good if you find someone trustworthy or on a referential basis, because you will have to share sensitive business data with them.

12. Choose your business software and tools

Business software and tools help you in lifting heavy weights that are required to run a business. These software and tools make your tasks easy and save your time. This software is more reliable and saves you from errors.

For example, you can use accounting software that will help you manage your finances, cash inflows and outflows, and inventory.

13. Hire a team

Now you know that you are going to start your business. It’s time to recruit a team that will manage your business and they will help you in turning your dream into reality.

Recruitment depends upon many factors. How much work you need to be done by individuals, and the skills that you need to carry out your business operations. Different businesses have different requirements for individuals. 

14. Advertise

Turning your business into a brand is not an easy job. A brand is not just a logo, brand name, or tagline. It is how people feel when they interact with your business.

To turn your business into a brand you can design your logo, tagline, jingle, business color, and fonts and create a brand positioning in the minds of customers. You can design your own website and online store that will enhance the overall customer shopping experience.

The Bottom Line

Here we conclude how to start a small business. Now you know what you are required to do when you are going to start a new business. Follow these steps and try to create a brand and enhance the customer experience and turn them into loyal customers.

How To Start A Small Business FAQ

1. How can I start my own business with no money?

You can start a business without any money. For that, you need to work on your business idea in which you have the skill and knowledge and you can provide innovative solutions to customers.

If you have a job, you can start a side business while keeping that job to reduce the financial risk. You should have a solid idea and you can generate funds through banks, crowdfunding, investors, and lenders. For that, your business idea and business plan should be impressive and convincing.

2. What is the fastest way to start a business?

The fastest way to start a business is by following these steps;

  • Refine your business idea
  • Conduct a market research
  • Write a business plan
  • Select your business structure
  • Register your business
  • Fund your business through financing
  • Obtain federal and state tax ID number
  • Open a business bank account and obtain a business credit card
  • Get business licenses and permits
  • Obtain business insurance
  • Choose your vendors/ suppliers
  • Choose your business software and tools
  • Hire a team
  • Advertise

3. What are the top 5 small businesses to start?

Top 5 small businesses to start are;

  • Freelance services
  • App development
  • Digital Marketing
  • Real estate business
  • Interior designer

4. What are the 10 business ideas?

The most successful types of small businesses are;

  • Online teaching
  • Freelance services
  • App development
  • Real estate
  • Interior designer
  • Consultation services
  • Digital Marketing
  • dropshipping
  • own a food truck
  • Photographer/ videographer

5. Which business is best for beginners?

Top business ideas for beginners;

  • Photographer/ videographer
  • Repairing services
  • Freelance services
  • dropshipping
  • own a food truck