If you are interested in learning how to start a small business but don’t know what’s involved or where to begin, then this post will help point in the right direction.
However, be warned that starting a business is no walk in the park, there is a lot involved.
#1. Come up with a Business Idea
The first step is coming up with a business idea. If you already have one great! If not, put on your thinking cap and get ready for some serious brainstorming.
Here are some questions to ask to get the ideas flowing:
- Can you turn one of your passions or interests into a business?
- Is there an amenity or service that’s missing in your local area?
- Do you have a skill that businesses need?
- Can you make an existing product or service better?
- Can you get in early on an emerging technology or trend
Coming up with ideas takes a while, so be patient. Beyond asking yourself the above questions, be observant as you go through your day to day life, and take note of ideas that come to mind.
#2. Perform Research
For any business to be successful, it has to solve a problem, fulfill a want, or provide something the market needs. So, before you jump headfirst into starting your business, perform research to validate your idea, and gain insights into the market.
To perform research, you can conduct interviews, survey people, and create focus groups. You can also use keyword research tools and market research platforms.
Through your research, you want to answer the following questions:
- Is there a need/demand for your product or service
- Who is your target audience
- What’s the competition like (and can you compete)
- What’s your business differentiator (known as a UVP)
Once you get answers to these questions, you will have a better understanding if you have a solid idea or not.
To learn more about how to conduct market research read this guide from Hotjar.com “How to do your own market research in a lean way: a 4-step guide + example“
#3 Plan Your Finances
Most small businesses require some initial investment for equipment, rent, wages, marketing, etc. When you know the initial investment needed, you can then decide if you need financing or not.
To plan your finances create a spreadsheet with all expenses associated with launching your business and the costs of maintaining operations until you can cover the outlay from incomings.
When estimating finances, it’s good practice to overestimate how much you need, the last thing you want is to run out of capital. Also, don’t underestimate how long it will take for your business to start making a sustainable income.
If you need financing there are lots of options you can avail of:
- SBA loans
- Term loans
- Short-Term loans
- Small Business Grants
- Equipment Financing
- Business Lines of Credit
- Merchant Cash Advances
#4 Choose Your Business Structure
Choosing the right business structure is very important. Your business structure impacts how much taxes you pay, your exposure to personal liabilities, and even your ability to get loans.
The most common business structures are:
- Sole Proprietorship
- Limited Partnerships (LP)
- Limited Liability Partnerships (LLP)
- Limited Liability Company (LLC)
- S Corporation
Before you pick a business structure, you should understand the pros and cons of each type and the impact each will have on you and your business. To make an informed decision, you might need to consult with a legal professional or certified public accountant (CPA).
To learn more about different business structures, I recommend reading the “Choose a business structure” guide published on the U.S Small Business Administration website.
#5 Make Everything Official
This phase is not the most fun! It requires cutting through some red tape and depending on your business; you might have a lot to cut.
- Choose & Register your business name
- Obtain Federal & State tax IDs (if in the U.S)
- Get permits and licenses (if required)
- Register trademarks and copyrights (if needed)
- Set-up a business bank account
- Get the correct insurance policies
There are a lot of legalities involved at this set-up phase, so it’s best to seek the appropriate professional advice – legal or other. You need to ensure that everything is correct and in order.
#6 Find a Suitable Location
If your business requires physical space, then you will need to find a space that best suits your needs. When accessing the suitability of space there are a few things factors that you should consider:
- Is the building accessible for customer with disabilities
- Do you have floor space for staff, customers and equipment needs
- Is there broadband, telephone lines, and power outputs
- Does the building have parking or is there parking nearby
- Are there any commercial or zoning restrictions in place
- Does the building meet safety and fire requirement
Your first business premises might not be perfect (it probably won’t). But, try and find one that ticks most of the boxes. You can put-up with an inconvenience or two, as long as they don’t impact your customers.
#7 Hire the Right People
Unless your business is a one-person operation, you will need to hire people. You can opt for full or part-time employees or contractors and freelancers.
When hiring, you want to make sure you hire the right people. After all, these people will play a significant role in the initial success of your fledgling business.
Here are some tips to help you find the perfect candidates:
- Write clear job descriptions that outline the responsibilities, duties, expectations, and character of your ideal candidate.
- Prescreen candidates with a phone interview before inviting them to an in-person interview.
- Ask the right interview questions to determine if the candidate has the right skills, personality, temperament, and cultural fit.
- In addition to interview questions, you might include an exercise to test the candidate’s knowledge or other competencies.
- Don’t rush the process if you have eight candidates to interview, even if you love the first one, you should finish the process.
- Perform a reference check to everything stated in the candidate’s resume is accurate and that their character and personality matches how they presented themselves during the interview process.
Before you rush out and start hiring people, it’s essential to familiarize yourself with federal and state employment laws and regulations and ensure that you are compliant.
#8 Grow Your Business
Opening the doors of your business, be the physical or digital doors is only the first step. Now comes the hard part! Getting customers and growing your business.
You can do this through:
- Social media marketing – You don’t need to have a presence on every social channel – pick the ones that are most relevant for your audience.
- SEO (Search Engine Optimization) – Is a process of optimizing your website so that it appears in search engines like Google and Bing.
- Offline Marketing – You could advertise on local radio, use billboards, sponsor events, distribute flyers.
Most businesses use a mix of different marketing methods to gain customers. Depending on your business type and budget, some methods might be better for you than others.
If you are not sure where to start, look to your competitors and try and gain insights into what is working from them. This way, you can make a more informed decision on what methods might be suitable for your business.
Now it’s your turn
Now that you know how to start a business. It’s up to you if you want to follow through. It’s not easy, and there is a lot involved. However, anyone can do it; you just have to want it enough.