8 Steps to Start Your Own Business
So, you’re interested in taking the first steps to starting a business. Working your own hours, being your own boss, and having something of “your own” that you can be proud of sounds great, right? It can be, but as they say, if it were easy, everyone would do it.
There’s a lot that goes into starting up your own business, and there’s no guarantee of success. To give you an idea of what’s involved, here’s a guide with helpful suggestions, insights, and best practices that might just help tilt the odds in your favor.
Understand How a Business is Different from a Startup
Small Business vs. Startup
Before diving into the process, it’s crucial to clarify if you’re going to create a small business or a startup. Both small-business owners and startup owners are considered “entrepreneurs,” but there are fundamental differences between the two models.
Small Businesses
• Goal: Fill a need within a market.
• Profit: Generate profits from day one.
• Market Reach: Serve small or regional markets.
• Growth: Aim for continual, sustained growth over a long period.
• Longevity: Goal is to stay in business as long as possible and make a steady profit.
• Community: Often central pieces of their local community.
Startups
• Goal: Disrupt existing markets or start a new one.
• Profit: Don’t expect immediate returns; turning a profit could take months or years.
• Market Reach: Intended for larger markets, possibly global.
• Growth: Delayed growth with the hope of eventual exponential growth.
• Longevity: Aim to develop something new, then either go public with an IPO, be offered a buyout, or transition into a larger company.
• Community: May not have ties to the local community unless investment and service are part of the business model.
The 8 Steps Toward Starting Your Business
1. Start with an Innovative Idea
Choose a Business Idea
Everyone has ideas, but for an idea to become a successful business, it needs extra thought. The first step in starting a business is to choose something that excites or interests you – after all, you’re about to spend a LOT of time with it. If you’re starting something just because it seems like a hot trend, are you going to have the commitment to see it through over the next several years?
• Interest and Excitement: Choose something that excites or interests you, as you’ll spend a lot of time on it.
• Market Need: Identify who your potential market is and if people will be interested in your products or services.
• Uniqueness: Make your offering distinct to fill an unexplored niche, expand or improve an existing service/product, or innovate an idea that could disrupt or create a new market.
Ask and Explore
• Pain Points: What needs are you servicing or what pain points are you addressing?
• Niche: Are you able to make your offering distinct to fill an unexplored niche?
• Innovation: Do you see an opportunity to expand or improve an existing service/product, or have you innovated an idea that could disrupt a market or even create a new one?
2. Consult with Advisors and Mentors
Seek Guidance
Don’t reinvent the wheel – no matter how novel your business idea is, or how unique your approach, there are other experienced entrepreneurs out there that you can consult with for advice and recommendations. Maybe you’re uncertain about how to effectively specify your target market or need guidance in putting together a business plan. No matter where you are in the process of starting your business, a mentor that you trust can provide helpful feedback, point you toward useful resources, and work through new strategies and ideas.
• Mentorship: Consult with experienced entrepreneurs for advice and recommendations.
• Feedback and Resources: Mentors can provide helpful feedback, point you toward useful resources, and work through new strategies and ideas.
• Networking: Mentors can connect you with other entrepreneurs, investors, local authority figures, or the chamber of commerce.
3. Research and Assess the Market
Define Your Target Market
You have some support, and you have a rough idea of what you want to do with your business. Now it’s time to clarify who you’re doing it for. Your initial instinct might be to cast as wide a net as possible – “everyone is a potential customer!” However, “everyone” will have a lot of competing needs and preferences, some of which directly contradict each other. It’ll be far easier to define a market segment that you’ll initially serve, with the possibility of scaling to other markets later.
• Specificity: Define a market segment that you’ll initially serve, with the possibility of scaling to other markets later.
• Market Research: Determine the type of outreach needed, timing, competitors, and customer insights.
Conduct Market Research
After you’ve identified who your target customers are, then you’ll need to do some additional market research:
• Outreach: Determine the type of outreach you need to do. If you’re going to break into an existing market, you’ll need to survey the landscape to ensure it’s not oversaturated. Your biggest concern will be how you are going to stand out. If you’re innovating something new and unlike any existing product or service, your concern is how people will know you exist and if they’d be interested.
• Timing: Determine if the timing is right. If the market is flooded with copycats and knockoffs, then you might be too late to carve out your own niche. Alternatively, is this a passing fad, or is the current economic climate right for your business?
• Competitors: Identify your closest competitors. If there are other companies similar in both product offering and location, establish how your business will compare. What are they doing well that you want to emulate? What areas will you surpass them in? How will you differentiate yourself?
• Customer Insights: The best way to conduct market research is to talk directly with your future customer base. Whether through online surveys, focus groups, or direct interviews, the best way to understand interest in your product is to learn their existing buying patterns, determine what needs you’re filling, and what pain points you’re solving.
4. Write a Business Plan
Create a Comprehensive Plan
A business plan is a proposal for your business that covers your immediate and future goals, the means of attaining those goals, and the timeline you have to accomplish them. This helps direct the initial organization of your business, specifies how you expect to grow, establishes the viability of your business, and is crucial to securing funding from investors.
• Overview: Clearly explain your business in the executive summary.
• Detailed Plan: Describe your product, develop a financial plan, and calculate your expenses.
• Business Name: Choose a name that is easy to spell and pronounce, not limiting, and not already in use or trademarked.
• Startup Costs: Accurately determine your startup costs, considering location-specific expenses.
• Business Structure: Decide on your business structure (Sole proprietorship, Partnership, Corporation, LLC).
5. Determine Your Location
Choose a Suitable Location
You have to work somewhere, and your location can have a profound impact on the type of products or services you offer. It will also determine your initial setup costs, fees for renting or leasing, and even the laws and restrictions your company will need to follow.
• Local Business: These can be stores or offices located within an area that offers products and services to patrons. High-traffic areas allow for the highest potential for walk-ins, easier connection with other local businesses, and collective marketing benefits. This is the most expensive option due to leasing or renting real estate in large markets. Explore sites like LoopNet, Showcase, and CityFeet for commercial property listings.
• Home Business: If you’re looking to save on renting or leasing a commercial space, starting a business within your own home might work initially. However, consider if your space is viable long-term. Does your location work well for your intended business? Is it hard for customers to find or access it? Does your space comply with local zoning ordinances?
• Online Business: Working from home isn’t just for telecommuting. If your products can be easily shipped or your services downloaded, then your business can be primarily online. Ensure the services/products you provide are available online, and you have the infrastructure to support this model (servers, computers, bandwidth).
6. Ensure Licensing, Registration, and Insurance
Legal Compliance
This is the “red tape” step that can be onerous for starting a business, especially if it’s your first. Don’t overlook the importance of licensing and registering, as you might miss out on valuable tax rebates or put yourself at financial risk.
• Federal Requirements: Register with the federal government for trademark protection or tax-exempt status if necessary. Conducting business as yourself under your legal name doesn’t require registration, but unregistered businesses miss out on personal liability protection, legal, and tax benefits. Federal requirements and fees depend on your business activity and the issuing agency.
• State and Local Requirements: After reviewing federal requirements, research your state, county, and city regulations. The necessary licenses and permits depend on your business activities and location. Business license fees vary, so visit your state’s website to find out which permits and licenses you need.
• Business Insurance: Purchase business insurance to protect your personal and business assets from unexpected catastrophes. The federal government requires businesses with employees to have workers’ compensation, unemployment, and disability insurance. Determine the type of insurance you need and shop for a policy that best suits your needs.
7. Secure Capital
Funding Options
No business ever started without capital to back it. If you’re independently wealthy or have a rich relative, you’ve got a leg up. Otherwise, you’ll need to find a funding source to get your business started. Here are some common ways to acquire capital:
• Business Loans: Most small businesses apply for commercial loans through banks. A business plan is essential as banks need to see how you plan to use their investment money, assess the risk, and determine loan repayment. Securing a loan may require putting up collateral (personal assets, inventory, property) and a personal guarantee on your credit to repay the debt. Alternatively, apply for a small business loan through the U.S. Small Business Administration or an alternative lender.
• Business Grants: Grants are essentially gifted money that doesn’t require collateral or repayment. They can be awarded at the federal, state, or local level with specific requirements. Grants are competitive and can require the business to adhere to stipulations. They often support women, minority groups, immigrants, and veterans or aim to develop overlooked areas or serve at-risk communities.
• Investors: New businesses needing significant funding, such as tech startups, might seek investors. This capital can come from wealthy individuals (angel investors) or pooled by private equity investors or venture capitalists. Similar to loans, investors need to be sold on the business plan’s viability before committing. Investors provide large amounts, often millions, with the expectation of a large payout when the business goes public or is purchased.
• Crowdfunding: Digital platforms offer crowdfunding as a viable means of raising capital. Rather than going to a single investor or bank, a company can publish its business plan online and use a crowdfunding service to raise smaller amounts from hundreds or thousands of backers. Crowdfunding has helped many companies in recent years, and there are various platforms designed for different business types. Crowdfunding campaigns aren’t always successful, and those failing to reach the required capital threshold won’t receive any money.
8. Get Your Name Out There!
Marketing and Promotion
If you wait until your doors are open before starting your marketing efforts, you’re too late! Your business plan should account for your marketing campaign, which should start in earnest in the months leading up to your product or service release. Determine which resources best fit your brand and reach your audience.
• Marketing Plan: Start your marketing efforts months before your product or service launch.
• Resources: Determine which marketing resources will work best for your brand and audience (website, social media, web ads, etc.).
• Modern Strategies: Consider pay-per-click advertising, partnering with influencers, and other modern marketing strategies.
FAQs About Starting Your Own Business
Should I Consider Franchising?
If the thought of being your own boss seems daunting but you’d still like to own a business, consider buying into a franchise. It provides a structured system and a tested product but offers less autonomy.
What Type of Financing is Best for My Business?
It depends on the type of business. Small businesses often secure financing from bank loans or grants, while tech startups might seek funding from angel investors or venture capitalists.
Do I Need a Website if I’m Not an Online Business?
Yes, you need a website. It’s essential for establishing an online presence and reaching your audience.
How Important is a Social Media Presence?
Very important. Choose the social platforms that fit your target audience and maintain regular updates.
Do I Need to Hire Employees for My Business?
Depending on your business, you’ll eventually need additional support from employees for faster growth and greater capability.
Do I Need a Lawyer or an Accountant?
Yes, you’ll need both a lawyer for legal matters and an accountant for financial management.
Are These Steps Applicable for an Existing Company or Organization?
Yes, these principles apply to intrapreneurs within a company, though some details may vary depending on the context.
Is There a Way to Master This Process?
Yes, programs like the University of San Diego’s Master of Science in Innovation, Technology, and Entrepreneurship (MITE) provide education and resources for aspiring entrepreneurs to succeed in starting their businesses.
Also Read:-
Recent Comments: