Are you thinking about starting your own business? Maybe you want to quit your job and make your side hustle a full-fledged company. Perhaps you’re just curious about how much work goes into starting a business.
No matter where you are in this process, these 11 steps will help you go from a basic idea to an operating enterprise.
Starting a small business can seem overwhelming, and developing a solid business takes time, so allow yourself to go slowly through this process.
1. Generate business ideas
You may have a winning idea you’re enthused about. Or maybe you’ve always dreamed of running your own business and aren’t sure yet what it’s going to be. Whether you’re building out that winning idea or just starting your list of possibilities, consider how you could use your passions and talents in a business. Allow yourself to think big. The day-to-day operation of a company isn’t always easy, so make sure to generate ideas you love. While brainstorming, avoid harsh judgments. Focus on your strengths and think creatively. You’ll refine ideas in the next step.
2. Choose and refine your business idea
Once you have established your business idea, refine it to make it practical and to establish what’s distinctive about it. Your business idea doesn’t need to be revolutionary, but it does need to be special enough to stand out from the competition.
What problem can you solve? What can you offer that’s unique?
For instance, if you’re a pastry chef who wants to sell cakes, what makes your confections special? Consider what similar businesses are in your market and which are missing.
3. Test and research your market
Who are your customers? It’s an easy mistake to assume everyone is in your target market – but you can’t market to everyone. What audience has a pain point that your product can alleviate? What exactly does your target audience buy? Where do they shop or look for your service? Knowing the habits and preferences of your clientele is critical to your success.
Scout similar businesses for ideas of what works and doesn’t. You can even ask the owners of these businesses if they’d let you interview them about their trade. Ask friends, family, neighbors, and social media contacts for their opinions and, if possible, test your product or service on them. If you’re selling a physical good, a flea market or a booth at a fair can be great places to test your market without spending much money.
Search forums such as Reddit for information on your industry. Use Google Trends to find data about searches in your field. Find information anywhere you can.
4. Draft a simple business plan
A good business plan is crucial for all aspects of your business. You can find free business plan templates online but choose a simplified one, like a “business model canvas,” to start. Don’t be afraid to amend and change your business plan throughout this process. Your business plan is meant to be updated regularly, so get into practice now.
5. Decide where you want to operate and choose vendors, if necessary
Every space has pros and cons. Your goal is to choose the most affordable, effective space for your business. If you’re designing an app, a brick-and-mortar store doesn’t make much sense. If a home business will work just as effectively as an office or storefront, work from home. You can expand later.
If you need to buy materials from vendors, this step is a good time to choose which vendors you’ll work with. Doing your research at this stage can save you time and money later.
6. Figure out how much money you’ll need to invest and determine funding sources
If you aren’t able to finance your small business entirely with your own money, there are many options for raising the funds. If you need a small business loan, you can check with banks and microlenders locally and online. Your personal credit will factor into available loans, so familiarize yourself with your credit situation. You will likely need to invest some of your own money, called equity, into your business. You can also put up assets you own, known as collateral, such as your car or house. Figure out what you can afford to risk.
If you haven’t maintained good records of your personal tax filings over the last three years (or haven’t been consistently filing), start gathering or finding your documentation now.
7. Establish your company name
This step is the fun part. Choose a memorable, unique, and easy-to-pronounce name for your product or service. Think of concrete words. Which is a more memorable business name for a bath bomb company: “AMVNDA Beauty” or “Purple Bunny Soaps”? You want customers to be able to recall your business name later to find you again.
Try to avoid excessive numbers, acronyms, and too many surnames. The following are some examples of difficult-to-remember business names: “ANGD Interior Decor and Lighting” or “Jenkinson, Bulgari, Rosselthorpe & Warwick Landscaping.”
8. Determine your business type and register
Many types of business structures offer various tax and liability advantages. Familiarize yourself with sole proprietorships, LLCs, S-Corps, and partnerships, and decide which type is right for your small business. Then file with the state. You can do this yourself or pay for a service to do this for you.
9. Apply for an EIN, your DUNS number, and any licenses you need
An Employer Identification Number identifies your business to the government. You can apply for one for free online through the IRS.
Your business needs a DUNS number to establish creditworthiness, get better terms from vendors and suppliers, and be eligible for certain contracts. Getting your number is free through Dun & Bradstreet, so don’t be fooled into paying for an “expedited number.”
To ensure you’re operating safely and legally, apply for any operating licenses you may need. Some industries – such as daycare, food and beverage, transportation, medical, and others – require specific licenses and/or trainings you must have before you can open.
10. Open a business bank account and get insurance if needed
When you open a business bank account, you can keep your personal finances separate from your business expenses and income. This makes accounting and taxes much tidier than using a personal bank account for everything.
If your business requires insurance, shop around for the best rate.
Purchase equipment and supplies needed to start your business — and keep all receipts.
11. Start operating
If you’ve followed these steps, you’re ready to start your business. Remain flexible while operating in case you need to pivot. Even the best-laid plans will need to change —so assess, refine, and track as needed.
Starting a small business can feel like a monumental endeavor, but with hard work and research, you have a real chance at success.
Even after their businesses are up and running, successful entrepreneurs actively fine-tune their business plans and their entrepreneurial skills to improve their business. Check out the ECDI Women’s Business Centers of Ohio’s weekly schedule of no-cost, virtual webinars. You can build or gain skills in marketing, finance, management, HR, and more.
This mutli-part sponsored series highlighting ECDI’s work in Columbus is presented with paid support by ECDI.
Since 2004, ECDI has assisted Ohio’s entrepreneurs through its one-stop shop business services model, suited to meet the needs of all entrepreneurs, regardless of what business stage they’re in. From providing capital to entrepreneurs looking to expand their businesses, to providing focused, business-specific educational opportunities to enhance entrepreneurial skill sets, ECDI works with their clients to meet their unique needs. Whether assisting a new client with a business concept or an accomplished entrepreneur opening a fifth location, ECDI’s “never say no” approach has allowed over twelve thousand entrepreneurs to take advantage of the services it provides. Visit ecdi.org today to learn more.