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Entrepreneurship is an appealing concept for many people, but figuring out how to start a business can be overwhelming at times. More important than anything else is a solid business plan and the determination to see it through.
In this article, we’ll go over an easy-to-follow guide for starting your own business! If you’ve come prepared, you can go straight to register your business for $39 only!
Introspection: Self-Evaluation Before You Start a Business
Let’s begin with the most fundamental question: Why do you want to start a business? Use this question to help you decide what type of business to start. If you want to make extra money, you should consider starting a side hustle. If you want more freedom, it might be time to quit your 9-to-5 and start something new.
Once you’ve determined your reasons for starting a business, begin asking yourself additional questions to help you determine the type of business you should start and whether you have what it takes. From determining where your skills lie to identifying your passions and budget, you’ve got to be brutally honest in your responses.
After all, it’s these questions that will eventually lay the groundwork for everything you do in the future, so it’s better to know the truth and face the music now rather than put it off for a later date. Doing so will make it easier for you to set up your own business – that too in just 12 meager steps!
12 Steps to Set Up Your Own Business
- Step 1 – Conceptualizing a business idea
- Step 2 – Perform market research
- Step 3 – Create a business plan
- Step 4 – Fund your new business
- Step 5 – Select and finalize a business structure
- Step 6 – Finalize your business’s name
- Step 7 – File business registration documents
- Step 8 – Create a business bank account
- Step 9 – Get licenses and permits
- Step 10 – Choose an accounting and payroll system
- Step 11 – Establish your business online
- Step 12 – Employee security: Retirement and health insurance
The first step in any big undertaking is self-evaluation, and deciding the path that you wish to pursue.
Step 1 – Conceptualizing a Business Idea
Do you already have a fantastic business concept? If that’s the case, congratulations!
Is there a particular area in which you are interested? Are you looking for a business that you can actively work on or simply own for passive income? Or is it that you’re interested in turning your hobby into a business? These are just a few of the multitude of questions that you should consider asking yourself before starting your own business.
However, there is no need to be concerned if you’re unsure about a business idea. For your convenience, here are a few pointers to help you come up with the best small business idea on your own!
Stay Ahead of the Competition
Consider what comes next. What new technology or advancement is on the horizon, and how will it affect the business landscape as we know it? Can you stay ahead of the game?
Provide People with a Solution
Fix something that bothers you. People would rather have less of something bad than more of something good. Customers will appreciate it if your company can solve a problem for them.
Bring the Heat to the Competition
Use the better, cheaper, and faster method. Do you have a business idea that isn’t entirely original? If so, consider the current offerings and consider how you can make something better, cheaper, or faster.
Step 2 – Get to Know the Market: Perform Market Research
Market research can help you mitigate risk because it informs you about the level of demand for your product or service as well as the level of existing competition. It also provides demographic data on your target customers, such as their income and location.
When it comes to research, you generally have two options: review existing sources or conduct your own analysis. Although relying on previously collected data can save you time and money, it may not be current or specific enough to your target clientele. If you begin your research from scratch, you will have the advantage of directly engaging customers through focus groups, one-on-one interviews, and surveys.
Step 3 – Laying the Foundations: A Business Plan
A business plan describes your objectives and how you intend to attain them. Many investors may want to examine your strategy if you require cash for start-up costs so they can assess your prospective profitability. Writing a business plan can also aid in the recruitment of partners and personnel.
When designing a business plan, you can go the usual route or go lean. Traditional plans are detailed and are frequently necessary to obtain a business loan. Lean plans, on the other hand, are typically shorter and may include more graphics than written material. They’re ideal simple business models that plan to get started quickly.
Whatever plan you choose for your new firm, it should at the very least include:
- An apt product description: its value proposition, and your proposed marketing strategy
- The lump sum initial investment required, and your expected revenue.
- Last but not least, your target market and your planned customer experience
Step 4 – Finances – Funding Your New Business
One of the barriers preventing aspiring entrepreneurs from pursuing their dreams is the high expense and the equally high risk of starting a business. On the bright side, however, even if your pockets are a tad bit tight, there are still various options to finance your small business, including, but not limited to:
Self-funding is beneficial since you’ll retain entire control over your firm. On the contrary, however, it can potentially pose the greatest personal financial danger. Are you up for the high-risk, high reward?
Investments From Angel Investors
Venture capitalists, sometimes known as “angel investors,” may be ready to support your company in exchange for participation on your board of directors or a stake in the company. The pre-requisites? A highly detailed, meticulous business plan is essential in securing investments from angel investors.
Micro-Finance Business Loans
If you don’t have sufficient capital but wish to retain full control of your company, a loan may be just what you need. Prepare a complete business strategy, as well as expected expenses and financial predictions, to show banks and credit unions.
Some people invest in a business for small perks rather than a share of the earnings or company ownership. Because these incentives are frequently in the form of items or brand awareness, your company may need to be in the broad consumer product or creative industries to benefit from crowdfunding.
Step 5 – Selecting and Finalizing a Business Structure
The legal structure of an organization recognized in a specific jurisdiction is referred to as its business structure. The legal form of an organization is a fundamental driver of the activities that it can engage in, such as raising capital, accountability for business commitments, and the amount of taxes that the organization pays to tax bodies.
Before deciding on a legal business structure, business owners should analyze their objectives and goals, as well as the characteristics of each business structure.
If you’re ready to register your business, Northwest Registered Agent can do the filing for you for just $39.
If you still need some research and thinking to do, some of the more popular business structures are:
A sole proprietorship is the most basic business form, with one person in charge of the day-to-day operations of the company. Additionally, the profits and costs of the business are included on the owner’s tax return.
A partnership is a type of business structure with two or more proprietors. It is the most basic type of business structure for a company with two or more owners. A partnership is similar to a sole proprietorship in many ways.
Limited Liability Company (LLC)
A limited liability company (LLC) is a business structure combining the best features of both partnerships and corporations. It protects business owners’ personal liability while reducing tax and business requirements. The business’s profits and losses are passed through to the owners, and each owner is required to include a portion of the profits/losses in their tax returns.
A corporation is a type of business structure that creates a legal entity separate from its owners. It is complicated and expensive to set up, and the owners must comply with additional tax requirements and regulations. Most corporations hire attorneys to supervise the registration process and ensure that the entity complies with the laws of the state in which it is registered.
Step 6 – Finalizing Your Business’s Name
After you’ve determined your structure, it’s time to come up with a business name. Consider how your company will be recognized by the general public. Your company’s name should:
- Reflect on your company’s brand and values.
- Convey the services or products you offer.
- Work as a logo and have a strong presence on social media and other marketing platforms.
- Lastly, you’ll also want to ensure that your chosen company name isn’t already in use.
Once you’ve decided on a name that works for your company and confirmed its availability, you should trademark it and register a recognizable version of it as a domain name for your business website.
Use your unique business name to then establish a presence on social media platforms such as LinkedIn, Twitter, Facebook, Instagram, and so on.
Step 7 – Filing Registration Documents
Although registering your small business with the government is not always required, it may provide you with personal liability protection as well as legal and tax benefits.
- Federal Registration: Except for a tax ID number or EIN, you usually do not need to register your business with the federal government unless you are applying for tax exemption or trademark protection.
- State Registration: You may be required to register in the state where your company was founded as well as any other states where you operate, a process known as foreign qualification.
- Local Registration: Most local governments do not require businesses to register with them, but certain business structures may require licenses or permits.
Rather than filing business registration documents manually, choosing a professional business formation service might be a better choice. For example, Northwest Registered Agent can handle all the legal requirements for registering your business.
With a professional service, you can be sure all legal requirements are met without having to read up on the legal nitty-gritty. That too for just $39!
Step 8 – Create a Business Bank Account
You’ll need somewhere to put all of your hard-earned money, but which type of business bank account best meets your current needs and long-term goals? Below is a list of some of the details that you may be required to include:
- A straightforward checking account with no or low monthly fees
- A bank with convenient locations and operating hours
- Mobile apps and online banking to help you manage your money on the go
- Loan products are available if you require growth capital now or in the future
To keep things moving, you might want to apply for a commercial line of credit, especially at the start. These short-term loans are useful for meeting short-term working capital requirements, such as inventory costs or operating expenses.
To apply for a credit line you must usually provide proof of income to the bank. If approved, they may set a limit that allows for continuous borrowing and repayment over the loan’s agreed-upon term.
Read how to open a business bank account for a step-by-step guide.
Step 9 – Getting Your Hands On Licenses or Permits
Take a moment before you open for business to ensure that you have all of the necessary licenses, permits, and insurance policies to operate legally. At this embryo stage, the last thing you want is to be shut down by a government agency.
Moving onto the elephant in the room, let’s see which licenses and permits you’ll need to start operating:
When operating in industries such as agriculture and broadcasting, it’s possible that you may need to obtain a federal license prior to commencing operations. Professional licenses are typically required in other industries, such as health care.
Even if you do not fall into one of these categories, you may require permission to conduct business. Freelancers and consultants, for example, may be required to obtain a home occupation permit.
Insurance is often just as important as licenses and permits. The type of insurance required varies vastly from business to business- after all, it depends on the nature of your business itself. Some forms of insurance to consider are:
- Workers’ compensation
- General liability insurance
- Product liability insurance
- Professional liability insurance
- Commercial property insurance
Step 10 – Choosing Your Accounting and Payroll System
Before you make your first sale or hire your first employee, you’ll need a way to manage your finances and pay the people who work for you. You can do these important tasks yourself with spreadsheets, hire an accountant, or work with a payroll service provider.
If you run a small business or have only a few employees, a manual payroll system may save you money. It is, however, the most time-consuming and risky because you could be fined for mistakes.
Hiring an accountant may provide you with greater peace of mind, but they are usually expensive, and you may lose some control over the process. A payroll provider, on the other hand, is frequently the best of both worlds, allowing you to maintain control and simultaneously risk reduction, all while saving you time. Sounds like quite a deal, doesn’t it?
At the end of the day, the decision on how to manage your finances depends wholly on the nature of your business, and how much you’re willing to invest into your young startup, whether it be in time, or capital.
Step 11 – Establishing Your Business Online
The market landscape is in constant flux, changing daily. Most customers use the internet to search for goods and services, and a useful and appealing website can be an important part of your marketing strategy. You definitely need to create a business website to grow your enterprise.
The ideal web presence should include the following elements:
- Engage your intended audience
- Include key terms for search engine optimization (SEO)
- Showcase your company’s logo.
- Have creative content
- Integrate social media channels
Although some platforms allow you to build a site with little or no development knowledge, it may be worth hiring a professional if you want to present a truly polished image of your business. Look for digital agencies that specialize in assisting small businesses because they are more likely to understand your needs and meet your budget constraints.
If your business model is internet-based, then the emphasis on your website’s design elements, and online marketing are more important than ever. This is because your website acts as your shop in the digital space, and the better it looks and feels, the better it is for your business.
94% of visitors will leave a website if it has a poor web design, and a significant 32% of mobile users will click away if your site takes too long to load. Keep these stats in mind while setting up your business website so you’re off on the right foot.
Step 12 – Security For Employees: Retirement and Health Insurance Plans
You should review your health insurance and retirement plan options as soon as possible because they can assist you in attracting employees.
Choosing a Health Insurance Plan
When going shopping for health insurance plans, keep an eye out for one that:
- Meets your coverage requirements (medical discount, limited or full-feature plan)
- Provides access to all necessary services (specialists, mental health, etc.)
- Provides leeway for co-pays, deductibles, or out-of-network expenses
Choosing a Retirement Plan
- Simple IRA
- Solo 401(k)
Listed above are three of the most common retirement plans opted for by young businesses. Each of these retirement plans has different contribution limits.
Consider your savings goals, time frame, and whether you anticipate needing access to the money before retirement to determine which is best for you. For more information, speak with a small business banker or financial advisor.
Why Should You Set Up Your Own Business?
The internet has created a plethora of new market segments for entrepreneurs to start small businesses, and there are countless sources of advice available on the web. Furthermore, it has made it possible for business owners to link up with their peers, gain insight from their mistakes, and use successful and effective decisions as a guide for their paths.
If working a nine-to-five, and spending 30% of your entire time at work, isn’t for you, perhaps it’s time to build your own ladder, set your own pace, and leave your mark on the world. If you have a great idea or a burning desire, here are seven compelling reasons to start a business today.
Be Your Own Boss
It’s only natural to want to take control of your own actions. Entrepreneurship does exactly that: it gives you complete power to carry out whatever action you’ve always wanted. Always wanted that specific color in your business’s marketing strategy? Well, now you can do it!
By setting up your own business, you can effectively take charge of making decisions and holding yourself accountable for them. If that thought frightens you, it’s time to start planning your path to becoming an entrepreneur. Here are just a few of the advantages of working for yourself:
- Increased control: You decide where your money goes, what kind of company culture you want, and the level of work you expect.
- Your business, your working hours: You choose your working hours, which means you have complete control over when you work and when you don’t.
- On-hands learning: You’ll get a crash course in every aspect of starting a business, from finance to health and safety.
You Choose Your Job
If you believe you have a variety of key talents, entrepreneurship offers a way to fully utilize these abilities.
As an entrepreneur, you will fill many roles and responsibilities in your business, all the more so when it is first starting out, so don’t be afraid to do the dirty work. Many days, you’ll find yourself in roles ranging from leader to marketer to therapist to receptionist. The following are examples of essential entrepreneurial skills:
- Business management skills
- Teamwork and leadership skills
- Customer service skills
- Financial skills
- Strategic thinking and planning skills
- Branding, marketing, and networking skills
Make Your Passion Your Source of Income
Starting a business is risky, so remember why you’re doing it when things get difficult.
A quarter of small businesses fail in their first year, and nearly a third fail in their second. After five years in business, the company has doubled in size. The first few years of a business are difficult, which is why passion is essential for survival.
During times of doubt, keep the following advantages of starting your own business in mind:
- It’s a personal matter: You get to devote your time and effort to something you enjoy.
- Self-actualization: You get to create your own vision rather than someone else’s.
- Keep an eye on it: You get to watch your creation grow from an idea to a colossal empire.
Boost Your Earning Potential
Perhaps your current job does not pay as well as you would like, or perhaps you have a sideline personal project that has the potential to blossom into a remunerative full-time career. In either case, you’ll have to invest the effort to make it a business.
Make a Difference in the Lives of Others
Starting a new business allows you to hire and train people who may not have had the privilege of working in the past. It also implies that you will have the opportunity to have a significant impact on society. In the US alone, new businesses annually generate up to 1.5 million jobs!
Always Continue to Learn
Some businesses fail because their product is subpar, while others fail because it is released at the wrong time. Most businesses fail due to a lack of market demand for their product or service or due to a lack of capital.
When you consider that 90% of start-ups fail and 75% of venture-backed start-ups fail, it’s clear that failure is something that needs to be addressed and learned from.
Rather than Search for an Expert, Become the Expert
Rather than waiting for someone to allow you to be the best at something you’re passionate about, strive to create your own opportunities.
Quoting Steve Jobs, “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking.”
“Don’t let the noise of other’s opinions drown out your own inner voice. And most importantly, have the courage to follow your heart and intuition.”
Become an expert in one area by:
- Determining your passion: Find something you’re interested in, and you won’t mind pursuing after work.
- Making room for it: The most effective way to become an expert is to practice, practice, and practice some more, whether through experience or by taking online business courses.
- Taking advantage of every opportunity: Accept anything that challenges you, whether it’s paid or unpaid, big or small.
However, all is not sunshine and rainbows when it comes to running a business. Read more about the advantages and disadvantages of running a business for a more balanced perspective on things.
If you’re ready to go ahead, take the first step and form your business!
Starting A Small Business: FAQs
Take a look and see for yourself the most asked questions that other aspiring entrepreneurs often ask us.
It’s definitely to start a business with little -or even no money- if you’re willing to put in the effort. Service-based businesses can be a good option for cash-strapped entrepreneurs, especially if you have expertise in a particular field or already own the necessary tools.
Product-based businesses generally require more capital, but in some cases, you can pursue them by starting a service business and using the profits to launch a product. Typically, you’ll have to do all of the work yourself and may have to keep your current job to avoid financial hardship. It’s difficult, but most definitely possible.
Generally speaking, all businesses require hard work and consistent effort. However, if we had to choose, we’d say that businesses involving services such as graphic design, teaching, and online consultation are generally easier to set up and establish. The reason being their low initial investment, and the online factor allowing them to be sold completely online-say goodbye to rent and bills!
What’s even more enticing is the fact that they are also more profitable business ideas than product-based businesses with overhead expenses. And, if you choose a service that complements your current skill set, you can sometimes be up and running quickly. Another advantage of service-based businesses is that many of them can be done as a side job, so the financial risk is reduced.
Startup costs vary greatly depending on the nature of the business you want to start. Some businesses require office space, while others require specialized equipment, and the majority today require a website.
As a business owner, you must carefully estimate these costs ahead of time. This will help you decide how to finance your business and may reduce the likelihood of running out of money before you make a profit.
Key Takeaways On How to Start a Business
Now that you know how to start a business, you can embark on the exciting journey of creating one. Establishing a business is no easy task. To take this leap of faith, you must have a lot of courage, creativity, motivation, and more so than anything else, belief in yourself.
There will be challenges and roadblocks along the way, but as long as you keep going and learn from your mistakes, nothing can stop you from succeeding.
It can be frightening to finally take life by the horns and take that first step. As the saying goes, “The first step is often the most difficult”.
Nonetheless, once you get started, you realize that the process of starting a business can be quite enjoyable. After all, nothing worth having comes cheap!
We bid you godspeed and good luck on taking the first step of your entrepreneurial journey!