7 Steps to Start a Small Business
Maybe it’s an idea that’s been germinating in the back of your mind for years. Or, perhaps it hits you like a bolt from the blue, this idea that you want to be your own boss.
Regardless of when or how it happens, it’s important that you strategize your transformation into an entrepreneur. The Small Business Association reports that although approximately 80 percent of small businesses survive their first year, the odds of success after that sharply diminish, with roughly half of new businesses failing within the first five years.
Follow these tips to help you better ensure the success of your venture.
- Start with Market Research
Is there are market for the product or service that you plan to offer? A combination of market research and analysis of the competition may reveal whether or not there’s a demand for your business and how to distinguish yourself from competitors. You may rely on existing resources to conduct your research or do your own by holding surveys, distributing questionnaires, holding focus groups and doing in-depth interviews.
- Create a Business Plan
You have dozens of ideas vying for attention in your head. Now, it’s time to write them down on paper as a cohesive strategy. A business plan is essential to taking entrepreneurs through every stage of starting and operating their company. It’s where you’ll record how your business will be structured, run and grown. A well-written business plan may be the key to attracting investors and other individuals who may be critical partners in getting your venture started.
- Get Funding
It’s no secret that starting a business requires money. While some new ventures are self-funded by the entrepreneur, most require an investment from one or more outside sources. After determining how much funding is needed, you’ll want to determine how much money you can put up yourself, how much may be needed from venture capitalists and how much may be acquired through loans.
- Pick a Location
With a business plan and funding in place, it’s time to look for a place to set up your business. If you’re following a completely online business model, this will consist of steps such as finding the right website designer and deciding on a website host that is powerful and secure enough for your needs. Brick-and-mortar business owners will take into account things like zoning ordinances, obtaining licenses and permits and choosing the best possible location to attract the most foot traffic.
- Choose a Business Structure
The business structure you select will in many ways determine how much your business pays in taxes, the paperwork that must be filed, your personal liability and the options at your disposal for raising money. In fact, it’s necessary to choose a structure before your business can be registered with the state, and you’ll also have to apply to receive a tax ID number. Whether you choose to structure your company as a sole proprietorship, partnership, limited liability company, a corporation, non-profit or cooperative will affect your business today and throughout the coming years, so be certain to weigh all of the risks and benefits before making a decision.
- Choose Your Business’ Name
This may not be as easy as it sounds. Of course, some entrepreneurs have a name in mind almost from the moment that they decide to start a business. However, it’s wise to do some research before staking a claim to ensure that no one else is already using a confusingly similar name in the industry. It’s smart to make your business stand apart from the competition. To safeguard your rights, you’ll want to register your business name at the state level and consider obtaining a registered trademark of the name at the state and federal levels.
- Open a Bank Account for Your Business
In almost every case, it is wise to keep your personal finances and your business finances separate. This means that it’s necessary to open at least a business checking account. Other accounts like business credit cards, a merchant services account and a savings account also may make sense depending upon your business. Business bank accounts are a smart choice because they offer additional perks that aren’t available through personal accounts. This may offer you enhanced personal protection should things ever go wrong.
With these steps complete, it’s safe to say that you’re ready to begin operations. Of course, even completing these steps doesn’t guarantee smooth sailing, but it will certainly get you started with confidence.