How to Start a Business: The Complete Guide

This guide will give you all the practical advice you need before diving into entrepreneurship with both feet.

If you are looking for a business idea, but have no ideas, then this guide is for you. This post will provide you with the information that you need to start your own successful business.

This guide will help you succeed whether you’re beginning a part-time business or leaving your corporate job to start your dream company. You’ll learn from professionals in finance, legal, marketing, human resources, software, and insurance, as well as me, a former small business consultant, throughout this piece.

As a small business consultant, I’ve assisted hundreds of entrepreneurs in starting and growing their businesses. I’ve also started and run a handful of successful internet companies on my own, and I’ll share what I’ve learned from that experience with you.

It’s now time for you to create your own company. I wish to assist you in realizing your ambition, and with the correct information and resources, you may do so.

Should You Start Your Own Company?

You may be wondering whether you have the necessary expertise or abilities to start your own company. Well, I’m here to tell you that no one does when they’re first starting out. The majority of entrepreneurs learn how to run a company “on the job.”

Now, you’ll want to make sure that if a client delivers you money, you’ll be able to handle it professionally. You don’t want to make a subpar product or provide terrible service. Slow down if you’re uncertain of yourself or your talents. Begin with a tiny company. One thing must be sold. Accept just one customer. Take the time to increase your success and confidence.

You have the ability to run a company. Be gentle with yourself and allow yourself time to adjust to your new position.

Characteristics of a Successful Entrepreneur

What factors contribute to a person’s success as a company owner? Being an active problem solver—seeing difficulties as challenges—is an essential quality. If you’re solving difficulties in your present work while everyone else complains, you could be ready to start your own firm.

Persistence and tenacity are also undervalued qualities. When a prospective client or provider says “no,” I see a lot of young businesses become down on themselves. As a new company owner, I can tell you right now that you’re going to receive a lot of “no’s.” Those who succeed must be tenacious and regard “no” as a momentary setback rather than a personal attack.

What Do Business Owners Earn?

As a full-time company owner, you can expect to earn less money than you do at your present work. It might take many years to build up a client base that will supply you with the money you need.

Furthermore, the quantity of money you may earn varies greatly depending on the sort of company you choose. For example, a firm that quickly grows, such as software or eCommerce, has the potential to produce more money than one that is based on an hourly wage.

The essential question to ask yourself is how much money do you feel comfortable earning? I’ve met some entrepreneurs who would rather be their own boss and have more flexibility than making half as much as they do now.

Here are the eight stages to getting your business off the ground:

1. Decide what kind of business you want to start.

The first and hardest stage is deciding what sort of company to start. You can have no idea what you want to start yet have a strong desire to do so. That’s fine! We’ll guide you through some suggestions to help you realize your entrepreneurial dreams.

Create a business concept

It’s more of an art than a science to coming up with company concepts. You should jot down any thoughts you have as you go about your day. Look for issues in your own life that you’re experiencing. Can you fix the issue and turn it into a company on your own?

Lists of Business Concepts

If you’re having problems coming up with a company concept, have a look at some of our suggestions:

Buying vs. Starting From Scratch Existing vs. Purchasing a Franchise

You could be wondering if you should start your small company from zero, acquire an established firm, or buy a franchise. Your company’s expertise and available finances are two factors to consider.

If you have no prior experience operating a company or in a certain field, investing in a franchise may help you succeed. When you invest in a franchise, you’re mostly learning how to operate the company. You’re more likely to succeed if you follow the franchise model in a densely populated location.

The same logic may be used in an established company. You’ll learn how to operate a company while also receiving past customers if you buy an existing one. This combination increases the chances of success compared to a brand-new franchise.

The cost of purchasing a franchise or an established firm is a major consideration. One of the key reasons most new entrepreneurs start their businesses from the ground up is the expensive expense. Keep in mind, though, that there are dozens more franchises available for less than $25,000.

How Much Funding Do You Require to Get Started?

Before you start your firm, you must know the answer to this question. I’ve met numerous folks who were unable to start their firm because it needed too much capital. If you don’t have the funds, keep in mind the following: Start small, but dream big.

It is more expensive to open a business with a physical location. You’ll need at least $50,000—possibly hundreds of thousands of dollars—in order to get started. To pay overhead expenses and produce a decent profit, a very tiny retail business needs to earn at least $100,000 per year.

If you require a lot of debt to start your first business—more than $20,000—you should think again about it. What do you think the worst-case scenario is? And how long do you think it will take you to pay off your debt? Start the firm part-time if feasible to get the required entrepreneurial abilities. Alternatively, you may wait. Save as much money as you can and take on as little debt as you can.

2. Put Your Business Idea to the Test

After you’ve decided on a company concept, you’ll need to put it to the test to see whether it’ll succeed. This is a stage that the majority of new company owners overlook. Don’t forget to do it! You could discover something useful that changes the sort of company you start or how you run it. All of the data you gather will be included in your business strategy.

Obtain Early Adopters (if possible)

Early clients—not family or friends, but consumers who have never encountered you before—are the finest method to verify your company concept.

Pre-sales or crowdfunding are two ways to secure clients early if you have a product. Consider presenting a reduced version of your service if you have one—do customers desire or need the service you’re delivering? Can you start small if you want to build a retail store? Consider setting up a pop-up store, selling at farmers’ markets, or selling on social media.

Carry out market research

Market research is data gathered about prospective consumers and the industry in which they operate. Use this data to make educated judgments about how many prospective clients are in your area and how the industry in which your firm operates will expand in the future. If you want to get money from a bank or an investor, you’ll need to include market research in your business plan.

Use the consumer database tool ReferenceUSA, which is available for free in tens of thousands of libraries throughout the United States, to investigate prospective consumers.

It’s a little frightening how much information ReferenceUSA has about individuals. If you didn’t know, loyalty cards (the kind you use at petrol stations and retailers) sell your purchase history to customer database businesses. For example, based on historical buying behavior, you can utilize ReferenceUSA to determine how many clients near your shop are likely to own a dog.

IBIS World is the greatest industry research firm (the one that the banks utilize). Before you get furious at me for suggesting an industry report that costs $925, I’ll let you in on a little secret. IBIS World is subscribed by several SBA-funded, no-cost business consulting centers known as Small Business Development Centers (SBDCs). Make an appointment to discover whether your local SBDC can help you with your industry research.

Make SWOT analysis.

A SWOT (strengths, weaknesses, opportunities, and threats) analysis is a critical thinking activity that helps you evaluate your company concept critically. If you have a business partner, it will be ideal; evaluating it jointly will guarantee that you are on the same page when it comes to the company’s future.

SWOT analysis may uncover good and negative elements of your organization that you hadn’t considered. (Image courtesy of wordstream.com)

A SWOT analysis is simple to do. Go through each area and make a list of your ideas:

• Strengths: What will the company excel at?
• Weaknesses: What does the company accomplish poorly?
• Opportunities: Outside of the company, what possibilities exist, such as reduced competition and neglected markets?
• Threats: What elements outside of the firm, such as rivals and legislation, can make success difficult?

Location

Start your location study today if you’re thinking of opening an office or a business. Why are you starting so early? You must ensure that you can afford it.

Several of my clients have shown excitement in starting their own companies. They devote a significant amount of time to studying the concept and drafting a business strategy. This is excellent until they start looking into the place and discover they can’t afford it, forcing them to start again.

Investigate possible sites to get an approximate idea of the cost of construction (renovations) and monthly rent. The data you gather will be included in your company strategy and financial predictions.

3. Come up with a business plan

You now have your concept and the evidence to back it up as a possible success. Now it’s time to combine all of that information, as well as your views about your company concept, into a coherent business plan.

You may feel compelled to skip this stage in order to get started on your company right away but don’t. According to studies, drafting a business plan increases the chances of your new venture succeeding.

Business Plan on a Single Page

Consider writing a one-page business plan if you’re launching a small or part-time firm. This plan will lead you through the fundamentals of your company, such as the issue it will solve and how it will earn money.

When offering your responses, be precise. Your strategy will be more effective if you are more specific. To gain honest feedback, share it with trusted friends and family.

A classic business plan

A classic business plan is what you need to create if you’re seeking funding from a bank or investor. It’s time-intensive and will be around 40 pages long. There are typically eight sections to thoroughly fill out, including a section on products and services, marketing strategy, and financial data.

Financial forecasts

The most important portion of your company plan is the financial facts and predictions section. It’s also the most challenging for some.

The forecasts are critical because investors and bankers just want to know when their money will be returned, which is understandable. You’ll probably find creating the predictions difficult since it requires an understanding of financial statements like the balance sheet and income statement. Research and a lot of predicting (which many business owners consider guesswork) regarding future revenue and spending are required for the estimates.

Software for creating business plans

If you find the Financial forecasts template above challenging to navigate, you may want to get additional assistance from software for creating business plans. This software walks you step-by-step through the business plan creation process. Additionally, you can learn from the in-depth educational materials it provides.

LivePlan is a free business plan program that you may try out for 60 days. It’s $15 every month after that. Use LivePlan to monitor your revenue and spending month after month once you’ve created your plan and started your company.

4. Obtain Funding for Your Company

You’ll need to seek more finances if you don’t have enough personal funds to start your firm. For aspiring entrepreneurs, there are a variety of financing sources accessible, including various forms of loans, investors, and crowdsourcing.

Family & Friends

“You should always go to family, friends, and idiots for cash before an investor or loan,” many in the startup finance industry suggest. The reason for this is that the cheapest sources of money are family and friends (and idiots).

An investor would most certainly want 50 percent ownership of the new company, as well as 50 percent of all profits—a costly alternative!

The major disadvantage of borrowing money from family and friends is the possibility of a strained connection. To prevent this, make a contract that specifies how and when you must repay the monies.

Obtain a Loan

A loan is an amount of money that must be repaid with interest over time. The size of a business loan might vary from $1,000 to over $1 million.

Just because you may be eligible for a loan doesn’t imply you should take advantage of it. Starting a small company with as little debt as possible is the best way to go. Remember that even if your company fails, you’ll still have to pay off the debt you accrued, which might take years.

There are various sorts of loans available to help you finance your business:

• Personal business loan: A personal business loan is usually less than $20,000 and must be returned within five years. The interest rate is determined by your credit score.
• Rollover for business beginnings (ROBS): For people who want to utilize a portion of their 401(k) or IRA (individual retirement account) to finance their company, this is a common alternative.
• A home equity loan or line of credit is a loan that uses the equity in your house as collateral. Because of their low interest rate, they are enticing.
• A microloan from the government: Usually under $50,000, a microloan from the government is sponsored by the SBA (Small Business Administration) or the local government. It’s just for particular types of enterprises, such as child care or businesses in undeveloped areas.
• SBA Financing: This is a rare sort of loan for a startup. It necessitates a “personal guarantee,” which implies that if you fail on the loan, your personal assets will be seized.

Look for an angel investor.

A rich person who finances early-stage firms is known as an angel investor. Investors often want stock participation in the companies in which they put their money. In return for their investment, they will get a percentage of your earnings if you give them ownership.

Finding angel investors near you can be a challenge. It’s best first to create a business plan with detailed financial forecasts. Then, start networking within your business community.

If you have a meeting with a possible investor, make sure you know all there is to know about your future company’s finances—you’ll be asked a lot of questions about it.

Crowdfund

When you crowdfund a small company, you ask people to place pre-orders for items or services. It’s an excellent technique to gather money before starting a company or developing a product.

Kickstarter and Indiegogo are two crowdfunding sites that might help you raise funds for your company. The platforms cost 5% of the total amount raised plus payment processing costs of roughly 3%.

Look through crowdfunding initiatives to see how much money may be generated for national and small companies. (Image courtesy of indiegogo.com)

Grants for Businesses

Grants for Businesses are funds given to start a business that doesn’t have to be repaid. Federal, state, and local governments are common sources of grants. Many new business owners seek them, but they are hard to find.

A business grant is usually allocated for a certain sort of company, such as one that does research. Grants might take many forms than money, such as discounted rent to launch a company in a city-designated disadvantaged area.

5. Take the Legal Steps That Are Required

Before you start your company, you’ll need to take at least a few legal measures. Start by naming your company, registering it with the state, and opening a bank account. If you’re establishing a physical site, you’ll need an EIN, insurance, and permission from the local government.

Your Company’s Name

You must first choose a company name before proceeding with the legal requirements below. This is the most crucial step since your company name will appear on all of your legal paperwork.

Keep in mind that you are not obligated to use this name indefinitely. You may always register a doing-business-as (DBA) with the state where your firm is principally situated if you want to alter the public-facing name of your company.

Obtain a Business License

We urge that all enterprises from a legal organization, such as a limited liability company (LLC) or a corporation (C corporation). The legal entity registration protects your personal assets if a customer sues the company. Selecting the LLC as an S company, or “small business corporation,” has tax advantages.

The following are some of the most frequent company structures:

• Sole proprietor: If you don’t Obtain a Business License, this is the default business structure. Typically, only very low liability businesses should stay a sole proprietor, such as a beginner graphic designer or tutor.
• Partnership: A partnership is similar to a single proprietorship, except that it contains two or more owners.
• LLC and LLP (legal entity): Similar to a sole proprietorship, but with the added benefit of personal asset protection in the case of a lawsuit or company bankruptcy. Multiple partners form an LLP (limited liability partnership).
• S company (tax classification): To save money on taxes, make your LLC or LLP an S-corporation. If you earn more than $20,000 per year from your firm, this structure is worth considering.
• C corporation (legal entity): This corporate form has various advantages, including the ability to transfer shares and the ability to exist indefinitely. To draft the necessary documentation, you’ll almost certainly need to engage with an attorney before incorporating a C-corp.

The cost of registering a company ranges from $40 to $500, depending on the state you pick. The state’s official business registration website is where you may register. If you’re having trouble navigating the website, consider using an online legal service like Rocket Lawyer to help you out.

Establish a Bank Account

To keep personal and company revenue and costs separate, all new enterprises must create a business bank account. If the IRS audits your firm, keeping all of your business money in one bank account will make the procedure and paperwork move more easily.

A minimum balance of $1,500 may be required for business bank accounts with well-known institutions. Consider switching to a more contemporary banking account if you think your balance will fall below that level. Novo is a free online bank account with no minimum balance requirements and free invoicing tools.

Additional Legal Requirements

Depending on the needs of your business, here are Additional Legal Requirements to consider:

• Employer identification number (EIN): An EIN is a free tax identification number provided by the federal government. It’s a must if you’re going to hire someone.
• Insurance for startups: If your company confronts specific risks, such as those associated with having a physical presence, dealing with sensitive customer data, or employing people, you may require insurance.
• Intellectual property: Registering a trademark prevents others from exploiting your logo, design, or phrase without your permission. Your novel product or method concept is protected by a patent, which ensures that no one else may copy it.
• Obtain business permits or licenses: Some businesses are required to have a license in order to function. Using a physical place for commercial purposes requires the acquisition of many permissions. Check the official business websites of your city and state to see whether you need a permission or license.
• Personalize legal forms: You’ll need to customize your legal forms if you’re hiring or producing contracts. You may either hire a local company attorney or utilize an online legal service like Rocket Lawyer to save money.

6. Make important hires

Your initial workers will be critical to your company’s success. Furthermore, many young business owners ignore the value of hiring professionals outside of the company, such as a bookkeeper, attorneys, or mentors.

Employ Your First Person

You will likely Employ Your First Person through word-of-mouth. Many first-time business owners use online resources such as Facebook or Instagram to post their job openings. If you can’t find a qualified candidate through your personal connections, turn to an online job board such as ZipRecruiter.

You must observe employment laws while hiring. Employees are guaranteed equal compensation under the Fair Labor Standards Act (FLSA). You must withhold Social Security and Medicare taxes from your workers’ pay under the Federal Insurance Contributions Act (FICA).

Engage the services of a bookkeeper or accountant.

If you’re beginning a part-time company, software like QuickBooks Online can help you keep track of your revenue and costs. If you have a full-time company with various goods and services to manage and a lot of costs to keep track of, you may want to employ a professional.

Many new business owners are unsure if they should Engage the services of a bookkeeper or accountant., but most people starting a small business only need a bookkeeper. If you need complicated financial statements or business tax advice, it’s wise to hire a certified public accountant (CPA).

Make contact with a business lawyer.

A business attorney can assist you with the formation of your new company, the creation of bespoke forms or contracts, and legal guidance. Even if you won’t need an attorney for these tasks, it’s a good idea to contact one before a legal issue arises in your company. After your firm has been served, you don’t want to have to deal with the stress of hiring business lawyers.

Meet with a Free Business Consultant

Several groups that offer free business advice and mentorship are funded by the federal and state governments. The SBDC has over 5,000 consultants around the country who provide no-cost advice on a range of business topics. These consultants usually have a bachelor’s degree or have owned a firm.

SCORE Advisers are volunteers who have operated a company in the past. They help entrepreneurs by acting as mentors. A SCORE Adviser may be a valuable benefit to your company, particularly if they have industry knowledge.

7. Set Up Systems & Software

You’ll find yourself establishing procedures to handle repeated chores as you arrange your firm. You can usually locate software to help you with the duties.

Below are two lists: one with procedures that virtually all new small companies will need to adopt, and the other with processes that almost all existing small businesses will need to execute. The second section contains many systems and applications that are highly recommended if they apply to you.

Must-Have Systems & Software

• Payment processing: To take credit card payments, you’ll require payment processing. Before you start, you’ll need to sign up with a merchant service provider.
• Accounting software: Bookkeeping is the process of keeping track of your income and spending. Accounting software is required if you are handling it yourself. If you don’t have time to manage your finances, try hiring a virtual bookkeeper.
• Payroll processing: You’ll utilize this method to pay your workers if you have any. Consider using payroll processing software to help the process go more smoothly.
• Business tax payments: It’s preferable to make quarterly business tax payments to the IRS so you don’t wind up with a big tax bill at the end of the year. You may usually send early tax payments using your accounting and payroll software.
• Business phone number: You’ll need a business phone number to distinguish between personal and business calls. A virtual phone line may be obtained for free or for a little price.
• Email address: You don’t want prospective consumers to contact you at “@gmail,” “@yahoo,” or any other address that isn’t your own. It seems to be unprofessional. Get an email address that ends in “@yourcompanyname.” This is available via Google Workspace for $6 per month.

Additional Systems & Software to Consider

• Business website: A business website is required if prospective clients are searching for your company name in search engines. You may do it yourself for roughly $15 each month.
• Email marketing: Use email to provide vital information to your consumers. Use email marketing tools to set up this method.
• Sell online: You may reach a wider audience by selling your goods or services online. This does not need the creation of an ecommerce website. Use a site like Amazon, Facebook Shop, or Etsy to sell your items.
• Customer relationship management software; is required if you have dozens (or even hundreds) of clients. This program aids in the management of client data such as prior conversations and contact information.
• Scheduling appointments: Do not arrange appointments by hand (unless you want to). To save your appointments in the cloud, use a free appointment scheduling program. Allow customers to plan appointments without having to contact you.
• Work from home: For the first time, COVID-19 is pushing and encouraging many individuals to work from home. Set up and manage your home office so that you may be productive while also enjoying your working environment.
• Take video calls: Since the epidemic, the number of video meetings and calls has increased dramatically. Allow your clients to use video conferencing software to meet with you.

8. Promote Your New Company

The last stage in beginning a company is to find consumers. To bring your new company in front of prospective clients, you’ll employ your marketing plan.

There are several ways you may use to get your company recognized. Don’t get too carried away! Remember that you don’t have to use — or pay for — all of these tactics. A few well-executed ones will bring in enough clients to make your company a success.

Make a marketing strategy.

Before diving headfirst into any of the marketing strategies, take time to make a marketing strategy. Think through and plan out how you want to market your business. In your plan, outline your brand, such as the logo, colors, font, and tagline overall feel.

Prior to generating any materials or online accounts, nail down the brand. This will guarantee that your company’s messaging is consistent. You don’t want prospective consumers to see various colors, typefaces, and taglines when they go from a brochure to a social media page. It should be a smooth, consistent brand experience.

Make promotional materials

You’ll want to make business cards at the very least to give out to prospective clients and suppliers while networking. Brochures, flyers, cards, and branded gear are some more marketing tools to consider.

You need stuff that prospective clients can take home as a new business. Many fledgling entrepreneurs make the mistake of putting too much emphasis on web marketing. Don’t underestimate the power of having actual marketing materials in someone’s house.

Market on the internet

• Website: If prospective clients are looking for your company online, a website is a must-have; you can build one yourself for roughly $15 per month. Create a free one-page Google My Business website if you’re on a small budget.
• Social media: Connect with your consumers where they spend their time online using social media marketing. Don’t attempt to build a social media following across all platforms. Choose one and devote the bulk of your effort to expanding it.
• Email marketing: Send helpful or interesting emails to prior customers to stay in contact. Don’t only focus your emails on deals and discounts. You’re going to lose subscribers.
• Listing on Google My Business (GMB): All companies searching for local clients may list for free on this page. GMB is being dubbed the new “homepage” for small businesses by several marketers. When people search for your company on Google, this is what they see before your website.
• Online directories: Your company is likely to be listed on various online directories, including Yelp and Yellow Pages. Also, take into account any industry-specific directories.

Make Connections With Local Businesses

Investigate networking organizations for local companies when you initially launch. Meeting and networking with other company owners is always a smart idea. Some of your initial clients may come through word-of-mouth recommendations and referrals.

Instead of attending four separate group meetings every month, select one organization to become involved with to get the most out of networking. Assume roles and duties within the group. Members will get more familiar with you and are more inclined to suggest you to others.

Advertisement Costs

You may want to pay to get your business in front of ideal customers. This paid marketing can give your brand recognition a jump-start. You can Advertisement Costs online or through traditional advertising channels.

You may target consumers based on demographics, interests, and geography using online advertising tools like Facebook Ads. Traditional advertising, such as radio and billboards, reaches a large audience and has the ability to elicit a response from the audience.

• Pay to have your company appear at the top of Google or Bing’s search results. Typically, you will be charged each time a searcher who is interested in your ad clicks on it. The price of a click will be determined by the number of firms bidding for ad space.
• Get your social media ad in front of both followers and non-followers with social media advertisements. The cost of an advertisement is determined by the competitiveness of the audience you’re targeting.
• You may pay for greater ranks or leads in online directories depending on the directory. Both are available on Yelp.
• Create business cards or brochures and mail them to prospective consumers’ houses in your area.

Conclusion

Don’t worry if you’re feeling overwhelmed by all of the chores that come with starting a company. It is a marathon, not a sprint, to start a firm. Patience is required. Allow yourself time to absorb and comprehend the preceding procedures.

Be proud of yourself for studying and attempting to navigate the complicated world of establishing a company. Make your next action today: What little step are you taking to turn your concept into a reality today?