How To Start A Small Business

How To Start A Small Business: A Step-By-Step Guide

There are no limits on who can become a great entrepreneur. You don't necessarily need a college degree, a bunch of money in the bank or even business experience to start something that could become the next major success. However, you do need a strong plan and the drive to see it through.

Starting a business entails understanding and dealing with many issues—legal, financing, sales and marketing, intellectual property protection, liability protection, human resources, and more.

Here are 10 steps that are required to start a business successfully. Take one step at a time, and you'll be on your way to successful small business ownership.


Step 1: Do Your Research

Most likely you have already identified a business idea, so now it's time to balance it with a little reality. Does your idea have the potential to succeed? You will need to run your business idea through a validation process before you go any further.

In order for a small business to be successful, it must solve a problem, fulfill a need or offer something the market wants.

Step 2: Write a Business Plan

Certainly, the idea of writing out a complex and detailed business plan might seem overwhelming, but luckily, there are a number of ways you can write your business plan—and you can complete the process by breaking it down into a handful of steps.

Moreover, in the current business environment, a traditional business plan should only be 30-50 pages—and can be even shorter if you’re writing what the SBA calls a “lean startup” business plan. At the end of the day, the best business plans are substantial enough to convey essential information that a lender, investor, or prospective business partner would need to know, and no longer than that. Plus, there are plenty of resources online, like business plan software, that can show you what to include in your business plan and how to make it look professional.

Step 3: Assess your Finances

Starting any business has a price, so you need to determine how you're going to cover those costs. Do you have the means to fund your startup, or will you need to borrow money? If you're planning to leave your current job to focus on your business, do you have money put away to support yourself until you make a profit? It's best to find out how much your startup costs will be.

Many startups fail because they run out of money before turning a profit. It's never a bad idea to overestimate the amount of startup capital you need, as it can be a while before the business begins to bring in sustainable revenue. 

Step 4: Choose a Business Structure

Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The business entity you choose will impact many factors from your business name, to your liability, to how you file your taxes.

You may choose an initial business structure, and then reevaluate and change your structure as your business grows and needs change.

Depending on the complexity of your business, it may be worth investing in a consultation from an attorney or CPA to ensure you are making the right structure choice for your business.

Step 5. Register Your Business

Once you’ve picked the perfect business name, it’s time to make it legal and protect your brand. If you’re doing business under a name different than your own, you’ll need to register with the federal government, and maybe your state government, too.

Step 6: Apply for Licenses and Permits

Many localities and states require new businesses to get a business license or permit before they can start operating. In some communities, there’s a generic business license for every type of business.

In other areas, certain highly regulated businesses, such as childcare centers and foodservice businesses, need to apply for special types of business licenses or permits. Therefore, you’ll want to make sure that you check the regulations for your industry, state, and municipality to ensure that you get all of the licenses or permits you need to legally start your business.

Step 7: Obtain Funding for Your Small Business

As you learn the ins and outs of how to start a business overall, you’ll also need to learn how to finance a business. At some point, you’ll need financing to either deal with short-term cash flow challenges or to fund the growth of your business. Although there are some businesses which are completely bootstrapped by profits, that isn’t the norm. Most business owners must obtain business loans or other external funding.

Step 8: Choose Your Accounting System

Small businesses run most effectively when there are systems in place. One of the most important systems for a small business is an accounting system.

Your accounting system is necessary in order to create and manage your budget, set your rates and prices, conduct business with others, and file your taxes. You can set up your accounting system yourself, or hire an accountant to take away some of the guesswork.

9. Brand Yourself and Advertise.

Before you start selling your product or service, you need to build up your brand and get a following of people ready to jump when you open your literal or figurative doors for business.

Create a logo that can help people easily identify your brand, and be consistent in using it across all of your platforms, including your all-important company website. Use social media to spread the word about your new business, perhaps as a promotional tool to offer coupons and discounts to followers once you launch.

10. Grow Your Business.

Your launch and first sales are only the beginning of your task as an entrepreneur. To make a profit and stay afloat, you always need to be growing your business. It's going to take time and effort, but you'll get out of your business what you put into it.

Collaborating with more established brands in your industry is a great way to achieve growth. Reach out to other companies or even influential bloggers and ask for some promotion in exchange for a free product sample or service. Partner with a charity organization, and volunteer some of your time or products to get your name out there.