Starting a new business? Start here
Jessica Baldwin / Published February 20, 2023
Congratulations on taking the first step toward starting a new business! We're thrilled you're here and ready to embark on this exciting journey.
People become entrepreneurs for various reasons, whether pursuing a passion, seeking financial freedom, or seizing an opportunity. Whatever your reason, the advice in this article will help you start a successful business.
While running a business can be challenging, it is also incredibly rewarding. It's natural to feel overwhelmed initially, but don't worry; we've got you covered. Before we dig in on the steps to starting a business, here are a few key insights that will help you be successful in your entrepreneurial journey.
Below, we'll break down the essentials of starting a business. You can take it one step at a time and achieve your entrepreneurial dreams.
How to start a new business
Starting a new business requires a great deal of thinking, planning, analyzing, and executing. It won't all come together in a perfectly straight line, so get comfortable with a little bit of chaos.
Let's get started!
1) Brainstorm your business idea
You've probably got a business idea keeping you awake at night, something you must pursue! Now, it's time to flesh out the details. Don't worry about starting a formal business plan just yet. At this stage, you want to be creative and get your thoughts down on paper or in a simple document. This is the fun part!
Get a copy of the free Brainstorm Business Plan worksheet here.
What is the product or service?
Describe the product or service your business will provide. What are the features? What's included? Are there options, add-ons, etc.? How does the product or service work?
If you have multiple products and services, describe each in detail. Consider each individually but also imagine them within the business context. Would the same customer purchase several of your products at once? Would they sign up for multiple services?
Summarize the overall product offering. For example, a healthy smoothie shop would have many menu items, so the overall product offering might be "quick and convenient nourishment."
An accountant may do tax preparation as well as bookkeeping. The overall offering would be "professional accounting services that save clients time and frustration."
Who is the customer?
Who will buy the product or service you describe in the step above? Be specific about who your business will cater to. Who will resonate with your offering?
Describe your target customer in detail. What are their challenges and desires? How do they spend their time? What is their age, gender, educational background, location, marital/family status, etc.? What kind of media do they consume? Where do they hang out online? What are some other products or services they use?
Defining your ideal customer will help you create a marketing plan to reach and convert the right people.
Why does the customer need your business to exist?
Your business has to solve a problem or meet a specific need for the customer you've identified above. It should provide something unique that differentiates it from the competition and offers customers value. Business owners must understand why potential customers care about the product or service to market it effectively.
What are the logistics?
How will your customer purchase the product or service? What does the process look like from start to finish? What kind of experience are you providing? What tools or procedures need to be in place to execute your plan?
Are you manufacturing a product? Do you need to source materials or ingredients? What are some avenues you can explore for this?
What else needs to happen "behind the scenes?" Are there specific operations you'll need to hire for or outsource?
Jot down your rough ideas for the equipment, software, rent, staff, and other business needs.
Identify the competition
Identify competitive companies in your industry. What can your customer currently use to solve the problem or fulfill the need? Also, consider alternative products your customer may be using. For example, if you sell an energy drink, you may consider coffee a competitive product.
What are the strengths and weaknesses of the competition? What do they cost?
How is your product better than the existing options? How do you differ?
How will you get customers?
A successful business requires a steady flow of clients or customers. How will you get in front of your target market? How will you reach and engage potential customers? You may utilize online marketing channels, including a website, email marketing, social media, and online ads. Traditional channels like local television, radio, print, or billboards also work for many businesses.
Direct sales, networking, and relationship building should also be considered.
What is the best way to grab the attention of your target audience and stay engaged with them over time? Learn more about marketing a new business.
Make a rough financial analysis
Start thinking through some basic numbers and pricing scenarios. How will you price your products or services? Will you have different pricing tiers?
Put together a rough estimate for monthly expenses and consider how many sales you'll need to break even.
You'll need to do more formal calculations in the future, but these rough numbers will be a good starting point.
Brainstorm and research business names
Begin by brainstorming several potential business names, but avoid becoming too attached to any particular name.
Before committing to a name, it's crucial to conduct research to ensure it's not already in use by another company.
Compile a list of at least five potential names, then conduct online research to determine if they are available. Perform a basic Google search, check the U.S. Trademark Electronic Search System (TESS) to ensure the name doesn't infringe on any existing trademarks, and search for available domain names.
When selecting a domain name, aim to secure the ".com" extension. If this proves difficult, you may decide to reconsider your business name.
2) Get free help
Did you know that you can get free business mentorship and advice?
Many communities have economic development organizations to help local businesses start and expand. You can find Small Business Development Centers (a program of the United States Small Business Administration (SBA)) across the United States. Find an SBDC near you.
You can also check with your local chamber of commerce for guidance on available resources.
SCORE is a national non-profit with experienced professionals who mentor new and established businesses. You can sign up for a local mentor or work with someone virtually from across the country, and it's free!
Sign up for a mentor and find additional resources at score.org.
Here are a few areas where you can gain insights from advisors at these organizations.
- Business planning – advisors can help you develop and evaluate your business plan.
- Business formation – choose the proper legal structure for your business entity and learn where to register it for licenses, permits, etc.
- Financial projections – create a financial plan to project sales, expenses, and profits.
- Financing – explore different ways to fund your business.
- Marketing and sales – consider various options to market your business and acquire your first customers.
- Operations – evaluate the necessary functions, equipment, employees, real estate, and more to operate the business.
- Manufacturing and production – receive guidance on how to create a physical product.
- Other resources – SCORE and SBDCs are connected to business resources locally and nationally. They may point you to programs your business can take advantage of!
Tap into these free resources and get the support you need.
3) Consult professionals
SCORE and the SBA's SBDC offer a wealth of free information. Still, at a certain point, you'll need to consult with professionals to finalize some details for your business.
An attorney can assist you in minimizing legal risks when starting a new business. They can assist in verifying that the name you choose for your business does not violate another company's trademark, provide guidance on the legal requirements and compliance relevant to your industry, and prepare essential contracts and legal documents. With their expertise, an attorney can give you a sense of security, knowing you have the necessary legal protection and guidance to safeguard your business interests.
Consulting with a tax professional when starting a business is crucial for several reasons. A tax professional can help you avoid costly mistakes, minimize tax liabilities, and ensure your business finances are set up for long-term success. They can provide guidance on the tax implications and requirements of various legal business structures, such as corporations, LLCs, and partnerships. A tax professional can also advise on the different tax deductions and credits available to you and help you plan and manage your finances to optimize tax benefits. They can also ensure you're compliant with local, state, and federal tax laws and regulations, such as sales tax and payroll taxes.
Consult with an insurance agent to ensure you have insurance coverage to protect your business. An insurance agent can assess the risks associated with your business and recommend appropriate policies to safeguard your company against potential liabilities. They can advise you on different types of business insurance, such as liability insurance, property insurance, and workers' compensation insurance, and help you choose the right coverage for your business needs. Additionally, an insurance agent can assist in reviewing and negotiating insurance contracts and guide how to manage and mitigate risks. By consulting an insurance agent, you can help safeguard your business against unexpected events and ensure that you're protected against financial losses that may arise.
4) Set up your new business
Once you've sketched out your ideas, gathered information, and consulted with advisors and professionals, it's time to formalize your plans and take action to establish your business.
Settle on the business name
Now that you've done adequate research, you can finalize your business's name. It's also a good idea to secure your online domain name if you haven't already.
Formalize your business plan
Creating a comprehensive business plan is an essential step in the process. A well-crafted business plan will help you identify your goals, attract potential investors and funding sources, and guide the direction of your business over time.
The business plan should include the following:
- An overview of the business and its products and services
- A market analysis that estimates market potential and identifies competition
- Marketing and sales plans, including how the products will be priced, distributed, and promoted
- An overview of operations, how the company will function, staffing requirements, equipment, real estate needs, etc.
- Detailed financial projections for the next three to five years, such as income statements, balance sheets, and cash flow statements.
- If seeking funding or financing, the business plan should detail how much funding the business needs and how it will be spent.
Register the business
Business formation is a critical step to establishing your company. With the guidance of legal and tax professionals, choose your business entity type and register your business. You may register as a sole proprietorship, limited liability company (LLC), or corporation.
Each business type has its own set of guidelines and regulations that must be followed, as well as advantages and disadvantages.
It is necessary to complete registration with your state, acquire an EIN (Tax ID number) from the federal government and, depending on your location, secure relevant business licenses or permits from city or county authorities. Get more info on registering your business from sba.gov.
Set up business banking
Setting up a bank account for your business is crucial in managing your finances and keeping your personal and business expenses separate. To start, you must choose a bank that offers business accounts. Many banks have unique business account options that offer features tailored to the needs of small businesses, such as online banking and low fees. To open a business account, you will typically need to provide documentation such as your business registration, identification, and tax identification number.
You may also apply for a business credit card through your bank or other companies. A business credit card can help you establish credit for your business, manage expenses, and earn rewards.
In addition to setting up a bank account and credit card, you may also need to apply for a business loan to support your operations or finance growth. To apply for a business loan, you'll need to demonstrate that your business is creditworthy and can repay the loan. This typically involves preparing a comprehensive loan application, including financial statements, tax returns, and other relevant business information. The bank or lender may also require collateral, such as equipment or property, to secure the loan.
Establish your brand
Before you officially launch your business, you'll want to get a few key marketing pieces in place.
Get a logo designed
A strong brand identity can help differentiate your business from competitors and create a lasting impression on customers. One of the first steps in developing a brand is getting a logo designed. A logo is the visual representation of your brand and should be simple, memorable, and relevant to your business. Once you have a logo, you can use it as a starting point to develop a style guide for your company's brand. This includes developing a color scheme, selecting fonts, and creating a consistent visual language that can be used across all of your business's marketing materials.
Once you have a logo, you can order business cards and other print materials your business will need.
Get your business online
It's necessary to set up a website and establish an online presence. A website is often the first point of contact between a business and potential customers, so making a good impression is essential. It should include information about your business, products or services, and contact information.
Similar to planning your business, it can be helpful to begin with a website plan.
You can also set up your social media accounts and begin making posts.
List your business in relevant online directories. Local businesses should be on Google My Business. Sites like TripAdvisor, Angi, and Yelp can also be helpful for location-based businesses. You may also find directories relevant to your industry.
5) Execute your business plan
Now that you have a plan, it's time to begin executing the steps. The steps required to begin operating depend on the type of business you are starting. Brick-and-mortar businesses like restaurants, boutiques, and others will require a great deal of setup. For example, suppose you're opening a restaurant. In that case, you must secure a location and equipment, develop a menu, source signage, and more.
Similarly, if you're manufacturing products, your path to launching the product may be more complex. You may need to have the product engineered, source materials, find a manufacturer, and more.
Alternatively, you'll have simpler operational requirements if you're providing a service that doesn't require a physical location. A business consultant may be able to begin operating with minimal equipment as a home-based business, for example.
Starting a business requires dedication and hard work. You must do the proper research, plan your finances and develop a brand that stands out from the competition. Setting up a bank account, applying for a business loan, and establishing an online presence are all critical steps to launching successfully. By taking the time to make wise decisions now, you can be well on your way to achieving your business goals in the future.
Free Brainstorm Business Worksheet!
Take the first step to making your business a reality.