Excited about your business idea? Don’t go overboard just yet. Too many entrepreneurs take off with lightning speed, racing toward their dream of starting a small business, and wind up overlooking some critical aspects of the process. Gasping for breath as they jump through unforeseen hurdles, many fall short of the finish line—or collapse shortly thereafter.
Following these seven steps can safeguard your small business’s success, so take your time reading through them before getting started.
How to Start a Small Business
1. Do Your Research
Your idea might be great, but has someone else beat you to it? You need to conduct market research and competition analysis to see where your business falls within its industry. It’s imperative to understand your consumer base from the get-go, avoiding the (expensive) trial and error process. While your small business is still a gleam in your eye, ask yourself the following:
- Market size: How many people would be interested in your product or service?
- Demand: Is there a need for it?
- Market saturation: How many similar companies are there?
- Pricing: What do people pay for these alternatives?
Remember that you need to fill a unique need in order to be successful. If you’re pursuing something that’s already been done, make sure you can do it better.
2. Write a Business Plan
Once you have your buyer persona in place, write a solid business plan which you’ll use to structure, run and grow your company. This is your place to think through the key elements of your business. Your plan can either be lean or exhaustive, but make sure you touch on the key components, including:
- Key partnerships, activities, and resources
- Value proposition
- Customer segments, relationships, and channels
- Cost structure and revenue streams
You’ll need to have all of these in place before you can approach any investors.
3. Secure Your Funding
Calculate your startup costs and decide how you want to fund your business—one of the most important choices you’ll make. You can find funding from a variety of sources, such as:
- Venture capital
- Small business loan
Look into your various options and evaluate the pros and cons of each. Always put as much of your own funds into starting your business as possible, otherwise known as bootstrapping. Too many entrepreneurs end up failing under the weight of their debt and self-funding is the safest way to avoid interest charges, penalties, and late fees.
4. Consider Your Location
Which type of funding you pursue might depend on your business’s location. Say, for example, you want to open a restaurant in Minnesota; you’ll likely contact local Duluth hard money lenders to cover the cost of the space. If you’re starting an ecommerce site though, you might not need any help from investors. Think carefully about going brick and mortar and contemplate whether you can grow your consumer base online first.
5. File Your Paperwork
Once your finances are in place and location decided upon, it’s time to get down to the nitty-gritty. Paperwork is never fun, but glossing over it can get you into some serious trouble. Choose your business structure and file for either an LLC or LTD. Make sure your business’s name hasn’t already been trademarked, and once you’re registered, get your federal and state tax IDs. Don’t forget to file any necessary licenses and permits, as well as opening your business bank account.
6. Start Selling
With the right structure in place, it’s time to start selling. The future of your business depends on revenue, so carefully flesh out your sales strategies and techniques. Identify targets who might want your product or service, then figure out the right sales funnel that can convert these leads into revenue. Be sure to keep detailed records of your transactions or you might wind up in hot water with the IRS come tax season.
7. Begin Growing
After you’ve optimized your sales strategy, you can begin growing your business to scale. Prepare to market yourself by getting on social media and use organic, influencer, or paid campaigns. Acquire an email list and learn how to use it. Know who to target both on and offline, and once you obtain a new customer, be sure to retain them; the easiest customer to sell is the one you already have.
If you follow these seven steps closely, you can outrun your competition—and business just might become a walk in the park.