12-Step Guide to Starting a Business
If you’re on Entrepreneur, odds are you already have the drive, but you might not know how to start building your empire.
That why we are here.
Check out this step-by-step guide to help turn your big idea into a successful business.
1. Evaluate yourself.
Let’s start with the most basic question: Why do you want to start a business? Use this question to guide what kind of business you want to start. If you want extra money, maybe you should start a side hustle. If you want more freedom, maybe it’s time to leave your 9-to-5 job and start something new.
Once you have the reason, start asking yourself even more questions to help you figure out the type of business you should start, and if you have what it takes.
- What skills do you have?
- Where does your passion lie?
- Where is your area of expertise?
- How much can you afford to spend, knowing that most businesses fail?
- How much capital do you need?
- What sort of lifestyle do you want to live?
- Are you even ready to be an entrepreneur?
2. Think of a business idea
Do you already have a killer business idea? If so, congratulations! You can proceed to the next section. If not, there are a ton of ways to start brainstorming for a good idea. An article on Entrepreneur, “8 Ways to Come Up With a Business Idea,” helps people break down potential business ideas. Here are a few pointers from the article:
- Ask yourself what’s next. What technology or advancement is coming soon, and how will that change the business landscape as we know it? Can you get ahead of the curve?
- Fix something that bugs you. People would rather have less of a bad thing than more of a good thing. If your business can fix a problem for your customers, they’ll thank you for it.
- Apply your skills to an entirely new field. Many businesses and industries do things one way because that’s the way they’ve always been done. In those cases, a fresh set of eyes from a new perspective can make all the difference.
- Use the better, cheaper, faster approach. Do you have a business idea that isn’t completely new? If so, think about the current offerings and focus on how you can create something better, cheaper or faster.
Also, go out and meet people and ask them questions, seek advice from other entrepreneurs, research ideas online or use whatever method makes the most sense to you.
3. Do market research
Start researching your potential rivals or partners within the market by using this guide. It breaks down the objectives you need to complete with your research and the methods you can use to do just that. For example, you can conduct interviews by telephone or face to face. You can also offer surveys or questionnaires that ask questions like “What factors do you consider when purchasing this product or service?” and “What areas would you suggest for improvement?”
Just as importantly, it explains three of the most common mistakes people make when starting their market research, which are:
- Using only secondary research.
- Using only online resources.
- Surveying only the people you know.
4. Get feedback
Let people interact with your product or service and see what their take is on it. A fresh set of eyes can help point out a problem you might have missed. Plus, these people will become your first brand advocates, especially if you listen to their input and they like the product.
One of the easiest ways to utilize feedback is to focus on “The Lean Startup” approach, but it involves three basic pillars: prototyping, experimenting and pivoting. By pushing out a product, getting feedback and then adapting before you push out the next product, you can constantly improve and make sure you stay relevant.
Just realize that some of that advice, solicited or not, will be good. Some of it won’t be. That’s why you should have a plan on how to receive feedback.
- Stop! Your brain will probably be in an excited state when receiving feedback, and it might start racing to bad conclusions. Slow down and take the time to consider carefully what you’ve just heard.
- Start by saying ‘thank you.’ People who give you negative feedback won’t expect you to thank them for it, but doing so will probably make them respect you and encourage them to continue to be honest in the future.
- Look for the grain of truth. If someone doesn’t like one idea, it doesn’t mean they hate everything you’ve just said. Remember that these people are trying to help, and they might just be pointing out a smaller problem or solution that you should look into further.
- Seek out the patterns. If you keep hearing the same comments, then it’s time to start sitting up and taking notice.
- Listen with curiosity. Be willing to enter a conversation where the customer is in control.
- Ask questions. Figure out why someone liked or didn’t like something. How could you make it better? What would be a better solution?
5. Make it official
Get all of the legal aspects out of the way early. That way, you don’t have to worry about someone taking your big idea, screwing you over in a partnership or suing you for something you never saw coming. A quick checklist of things to shore up might include:
- Business structure (LLC, corporation or a partnership, to name a few.)
- Business name
- Register your business
- Federal tax ID
- State tax ID
- Necessary bank account
- Trademarks, copyrights or patents
While some things you can do on your own, it’s best to consult with a lawyer when starting out, so you can make sure you’ve covered everything that you need.
6. Write your business plan
A business plan is a written description of how your business will evolve from when it starts to the finished product.
As an angel investor and tech-company founder Tim Berry wrote on Entrepreneur, “You can probably cover everything you need to convey in 20 to 30 pages of text plus another 10 pages of appendices for monthly projections, management resumes, and other details. If you’ve got a plan that’s more than 40 pages long, you’re probably not summarizing very well.”
Here’s what we suggest should be in your business plan:
- Title page. Start with a name the name of your business, which is harder than it sounds. This article can help you avoid common mistakes when picking.
- Executive summary. This is a high-level summary of what the plan includes, often touching on the company description, the problem the business is solving, the solution and why now.
- Business description. What kind of business do you want to start? What does your industry look like? What will it look like in the future?
- Market strategies. What is your target market, and how can you best sell to that market?
- Competitive analysis. What are the strengths and weaknesses of your competitors? How will you beat them?
- Design and development plan. What is your product or service and how will it develop? Then, create a budget for that product or service.
- Operations and management plan. How does the business function on a daily basis?
- Finance factors. Where is the money coming from? When? How? What sort of projections should you create and what should you take into consideration?
For each question, you can spend between one to three pages. Keep in mind, the business plan is a living, breathing document and as time goes on and your business matures, you will be updating it.
7. Finance your business
Take a look and consider your own resources, circumstances and life state to figure out which one works best for you.
- Fund your startup yourself.
- Pitch your needs to friends and family.
- Request a small-business grant.
- Start a crowdfunding campaign online.
- Apply to local angel investor groups.
- Solicit venture capital investors.
- Join a startup incubator or accelerator.
- Negotiate an advance from a strategic partner or customer.
- Trade equity or services for startup help.
- Seek a bank loan or line of credit.
8. Develop your product or service
After all the work you’ve put into starting your business, it’s going to feel awesome to actually see your idea come to life. But keep in mind, it takes a village to create a product. If you want to make an app and you’re not an engineer, you will need to reach out to a technical person. Or if you need to mass-produce an item, you will have to team up with a manufacturer.
When you are ready to do product development and outsource some of the tasks make sure you:
- Retain control of your product and learn constantly.
- Implement checks and balances to reduce your risk.
- Hire specialists, not generalists.
- Don’t put all your eggs in one basket.
- Manage product development to save money.
To help you have peace of mind, start learning as much as you can about the production, so you can improve the process and your hiring decisions as time goes along.
Also, make sure you have the necessary certificates or educational requirements so that when someone inquires about your service, you’re ready to jump at a good opportunity.
9. Start building your team
To scale your business, you are going to need to hand off responsibilities to other people. You need a team.
Whether you need a partner, employee or freelancer, these three tips can help you find a good fit:
- State your goals clearly.
- Follow hiring protocols.
- Establish a strong company culture.
10. Find a location
This could mean an office or a store. Your priorities will differ depending on need, but here are 10 basic things to consider:
- Style of operation.
- Foot traffic. I
- Accessibility and parking.
- Proximity to other businesses and services.
- Image and history of the site.
- The building’s infrastructure.
- Rent, utilities, and other costs.
Once you know what to look for and it’s time to start searching for a place that fits all of your qualifications, these four tips can help.
- Think on your own timeframe.
- Play the whole field.
- Click around town.
- Do the deal on your terms.
After you have a location, you can focus on the aesthetic. You can check out a few design ideas here.