November 1, 2021

10 Steps To Start a Business: A Brief Overview

To help out, we’ve created this nine-step business startup checklist so you’ll know you’re on the right path.‍ Let's start a business!

It’s easy to think of being your own boss as almost a dream, something only a lucky few get to do. 

The reality is that escaping a cubicle to run your own business isn’t out of your reach. 

Today's social and technological climate makes leaving a traditional full-time job for a self-employed position easier than ever. Plus, when you're in charge of your career, you control how you achieve your personal and professional goals.

Setting Yourself Up for Success

Before you buy yourself that mug that says "Boss," let's take a moment to walk through the first steps in starting your business. 

To start, think about your schedule, location, and rates. It’s also a good idea to prepare for the excitement and challenges of starting your business — it’s an unpredictable journey.

Adapting to changing circumstances is a necessity if you want to run a company, but it doesn't stop there. You’ll also need a pool of customers willing to purchase from you every time you put your product or service into the market.

Setting Your Schedule

Imagine your ideal workday and what would let you perform at your best. Here are some questions to ask yourself:

  • What time would you wake up? Are you a morning person, or do you work better in the afternoon?
  • When would you start working, and how long would you work for? You’re free to determine your business hours based on your personal schedule.

When you're in control of your schedule, you're primed for productivity and contentment in your work.

Choosing Where To Work

Think about which location makes the most sense for your work. 

Do you like the bustle of a crowded coffee shop? The calmness of a library? If you need a dependable area to work from each day, you may want to rent a spot at a coworking space or convert a spare room into a home office.

Determining Your Pay

Not everyone wants or needs a six-figure income. 

Your personal finance goals may be more modest. You may prefer to charge more and work with fewer customers or offer low rates to draw crowds. When you're the boss, you set your rates, and those rates directly impact your earnings.

Although the prospect of naming your own salary is enticing, remember that you may need to put much of the money you earn back into your business to help it grow, especially in the early stages.

A Step Towards Being Your Own Boss

Quitting a day job can be a big step. 

If you want the added financial security of a steady income while you get your business up and running, you may want to start working for yourself part-time.

Part-time work can help you transition into doing something you love full-time. You might start by freelancing, drawing on skills you already have or want to develop. 

If you're organized and efficient, some part-time virtual assistant work might help you learn more about business administration — which will be handy when you launch your own company. 

Think of how a hobby like photography or a knack for making home repairs can translate to freelance work. These kinds of skills can serve you well in your business, and they often don't require you to invest in an expensive storefront or stock lots of inventory. 

Be Your Own Boss by Owning a Business

Owning a business full-time is a major step beyond part-time work. You'll be dealing with the daily challenges and rewards of business ownership, and your financial success largely depends on your decisions.

Getting Started

What you'll need in your early stages varies based on the type of business you're setting up, but below are a few of the basics:

  • You'll need to choose a product or service offering — or a combination of these — that fits your interests, experience, and market demand. Deciding what to do can be the biggest challenge.

  • Once you've settled on the right business, you'll need to figure out the business structure and model that works for what you've chosen. Will it be a partnership, corporation, or LLC? An LLC is a solid choice for many small business owners because they're easy to set up and protect you from personal liability.

  • You'll then need to write a business plan, not just for planning purposes, but because it will be required to get any kind of formal funding from a bank. It doesn't need to be dozens of pages, but it should spell out what market you're trying to serve, what you bring to the table, what you'll charge, and what your path to profitability is.

  • Finally, you'll set up the various business processes necessary to run operations. These will include accounting — software like QuickBooks can be an excellent place to start — so you can make sure your books are balanced and readily available for legal and tax purposes. Other processes to set up may include personnel management, email, and customer relationship management (CRM) software, to help you keep track of clients.

A Step-by-Step Guide for Starting Your Business

Follow the steps below to hit the ground running with your business.

1. Find and Refine Your Business Idea

Every business starts with an idea, and you can get ideas from different sources. 

For instance, many people get their business ideas from other countries and cities and implement them in their communities. 

Your expertise is also an excellent source for a business idea. If you have worked as a CFO for many years and feel it's time to start your own business, you can offer financial consulting services as a freelancer or start a financial consulting agency.

Once you have your business idea, start to refine it.

  • Do your due diligence. Find companies or individuals implementing your idea and learn what they are doing. Consider franchising since all you need is capital and a promising business location.
  • Look for gaps in their implementation strategies. Are there specific issues customers want resolved? Solving these pain points will give you a competitive edge.
  • Define your reason(s) for starting your business. Are you doing it for personal validation, or do you want to solve a problem in your community? Reasons greater than individual needs will give you better business results and success.
  • Determine your business’s name once you know the value of your idea.
  • Identify your target market and why they might want your products or services.

2. Create a Business Plan

A business plan should identify the following:

  • Your business purpose
  • Your target market
  • Your business objectives
  •  Your source of capital

A well-written business plan ensures your business has a ready market before launching. To get it right from the start, conduct market research and identify potential customers and their demographics.

Use market research tools like focus groups and surveys to get feedback directly from your potential customers. This research allows you to get first-hand information about customer needs, shopping behavior, and interests.

Market research also identifies your competitors through competitive analysis. Competitive analysis reveals your competitors’ limitations, helping you find the niche your company fills. 

Don't forget to create an exit strategy, which prepares you for the future by identifying challenges and keeping you open to unexpected opportunities.

3. Gather Finances

Any new business needs starting capital. Determining where you'll get funding for your idea is critical.

  • Do you have savings to use?
  • Can you get a loan from the bank, or will you opt for crowdfunding?
  • Can you get investors?
  • How much money do you need before you start making profits?

Overestimate the amount you need before gathering the finances. Thenconduct a break-even analysis to determine when your business will start to turn a profit. This analysis also helps you determine the minimal amount of performance you need to make profits. Use this formula:

Break-even point = fixed costs / (average price – variable costs)

Find out your expenses, meaning the cost of production, labor, and other variable costs. Then, determine the pricing for your products or services. Use these details to determine the amount of money you should make before making profits.

Another important aspect of gathering finances is choosing the right bank for your business.

Opt for community banks as you start your business because they will be more willing to work with you and know your local market conditions. Your bank should fit your specific business needs.

4. Define Your Business Structure

Choosing your business structure affects how you run your business, pay taxes, and understand your liabilities. 

For instance, a sole proprietor owns the entire business making them responsible for every business tax, debt, and obligation. As such, you can lose your personal assets if you take a business loan.

On the other hand, a partnership gives you someone else to share the responsibility and personal liabilities of the business. If you want to separate your personal liability from your business, choosing the corporation model benefits you most.

However, corporations come with their unique set of rules and regulations. Limited liability company structures are hybrid structures perfect for small businesses since they have the tax benefits of a partnership and the legal protection of a corporation.

Learn as much as you can about business structures before settling on one, and keep your future business goals in mind when choosing your business structure.

5. Register Your Business

You need a business license to run your business under the local, state, and federal governments. The primary documents you need for registration include:

  • Articles of incorporation, including your business purpose, name, structure, and other information like your type of stock.
  • Operating agreements are needed for some limited liability companies.
  • “Doing business as,” which means you’re using your legal name as your business name. This is an alternative to the operating agreement and the articles of incorporation and is perfect for partnerships or sole proprietorships.
  • Employer identification number from the Internal Revenue Service if you plan to hire employees.
  • State and Federal tax forms for your tax obligations.
  • Permits and local licenses from the state and federal governments.

Also, check to see where your state requires you to have a seller's permit.

6. Get an Insurance Policy

Don't launch your business until you havethe right insurance policy

This will protect you from issues like theft and property damage. If you have the funds, get more than one insurance cover.

For instance, get general liability business insurance, unemployment insurance, and workers' compensation. Your location will also determine the type of cover you need. Consider taking professional liability insurance if you have a professional services business.

7. Recruit Your Team

You will likely need a partner or employees to help you with day-to-day activities in your business. 

You will also need professional expertise to help you build your business from the ground up. Make a list of the employees you need and then start the recruitment process.

Define the job description for every employee, create a communication feedback channel, and set a culture that inspires collaboration and teamwork.

8. Get Suppliers and Vendors

You need supplies for your inventory, products, or services and third-party vendors like business phone systems providers to enhance your operations. Choosing the right vendors is critical because they will access your company data.

Get authentication and proof of privacy from your vendors before forming a partnership. Ask them to provide case studies of their successes with other customers and their security measures. Your company information should remain secure at all times.

Also, consider using different vendors for the same service. A good example is using multiple vendors to ensure your customers have multiple payment options.

9. Branding and Marketing for Your Business

To get the most out of your sales, you need to brand your business before launch. Technology has provided cheaper options for putting your name into the market. Some of these ways include:

  • Social Media: Social media is excellent for spreading the word about your new business venture. Choose a social media platform based on your target audience. Offer promotional material like sales or coupons to get customers buzzing about your business.
  • Your Business Website: A company website is a perfect space to build your reputation and increase your brand awareness since many customers consider your website proof of your existence. Your website is also a critical space for interacting with your customers.
  • Company Logo: Thisit helps customers identify with your brand easily.
  • CRM Software: CRMs enhance customer relationships by helping to manage communication between them and your team. CRM software stores customer information that you can use to build a customer list, create email marketing initiatives, and foster stronger customer relations.
  • Content Sharing: Create exciting and relevant content and share it with your clients to build engagement. Use content to create an excellent online presence and invite your target audience to like, comment, and share your business with their followers.

10. Focus on Growth

Launching your business is only the beginning. 

Next, you need to sustain your new business. This means finding a way to make profits continuously, and you can only do this through growth. Look for opportunities to use for development, like collaborating with other established businesses in your industry.

Partner with well-known influencers to help your business grow its client base. Also, invest in PPC campaigns or other forms of advertising to increase your sales. If you can, volunteer your services to build your network. But above all, always be ready for change by creating an agile business.

Alternative Paths To Owning Your Own Business

Whilebuilding your own business from scratch might be how most people envision becoming their own bosses, it's not the only way to own your own business — or even the best one.

Creating a new business from the ground up gives you plenty of flexibility and room for creativity, but there's typically a higher risk of failure since it's not a tried-and-true proven model. It's also harder to estimate costs and revenue, numbers that can vary widely based on the type of business you choose.

Here are a few alternative paths to business ownership: 

Buy a Business

The good part of this one is that you're buying something that has already worked well enough that it's being sold as an asset. 

However, the price tag on a business is typically high — the better the business, the higher the cost. You also don't get much control in developing a new brand unless you want to reshape the business into something else, which could affect profitability. 

Buy a Franchise 

Franchising comes with training to teach you how to run your business systems well. But like buying a business, it's not usually a low-cost option. 

There's a hefty franchise fee, plus ongoing royalties that cut into your take-home profit. You might miss the creative control you'd have if it were your own brand.

Partner With Another Organization

An organization like Hoist offers a proven model for business ownership for dedicated aspiring entrepreneurs. It combines the benefits of building your own business (creative control and total ownership) with the advantages of buying a business or franchise (stability, training, and a proven concept).

Partnering With Hoist

If you're ready to become your own boss, here'san overview of how Hoist differs from other approaches to owning your own business:

  • The freedom to own and run your own business
  • No franchise fee
  • Coaching and training to ensure you start your business on the right foot
  • Negotiated rates with vendors and services, bringing your costs down in a way you couldn't on your own
  • A path to profitability in months rather than years
  • Automated and risk free marketing

Take Action

Whatever path you choose to become your own boss, remember that the first step on that journey begins with taking action. Now, you're ready to get started.

Consider the type of business setup and style that appeals to you. Weigh the pros and cons of starting your own business versus relying on a business model proven in the market. Then, take action to achieve your dream. Your future self will thank you for it.

Sources:

Tips for Attracting New Customers/ AOF

Break-Even Analysis | REDFworkshop

Small Business Insurance Basics/ Insurance Information Institute

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