10 Steps to Start a Small Business
Launching your own business is an admirable and worthwhile goal! While you're probably eager to get started, you may also be unsure how to go about it the right way. Fortunately, countless others have forged the way and there are concrete steps you can follow to give your business a strong start while setting yourself up for success in the process.
So much of starting a business involves imagining the big picture of what your products, services, and solutions can offer your customers. But before you can present your deliverables, it's important to focus on the small, yet crucial, details required to build your business and brand.
Here, we outline ten key steps to help you move in the right direction and to solidly establish your business:
1. Develop your business plan
It sounds simple enough, but, as with any good plan, a lot of thought goes into it, with many factors to consider. First, what is a business plan? The purpose of a strong business plan is to support that your business idea is, in fact, viable. Your plan is intended to present your business idea to potential investors, clients, and financial lenders. Aside from any outside audience, the process of developing a business plan forces you to consider key metrics like your competitors' pricing, social presence, and online reputation, including reviews.
Second, what should your business plan include? According to Forbes, a business plan articulates a description of your company, focuses on what you intend to do, and how you will do it. Click here to download our business plan template.
2. Know your audience
No matter how innovative your product or service is, what really matters is if there is an audience for it. Once you’ve done your research on who your product or service is designed to help, it’s imperative to further determine the following:
- What are my customers' pain points?
- How will my product or service make a difference in their lives?
- Is this offer evergreen or a response to a specific moment in time?
To arrive at these answers with a greater measure of accuracy, talk to your potential customers and test the market by offering free trials of your product or service. Collect honest feedback to improve what you're selling and target your ideal audience with greater precision and purpose.
If there isn’t an audience for your product or service, and answers to the above questions are not particularly compelling, there won't be a profit.
3. Remember, starting a business is a numbers game
An honest and academic review of your financials is important. People who become successful business owners not only assess just how much it will cost to start a business, but they also factor in what they will need to support the business during its infancy. If you are unsure of the degree of solvency of your financials, asking a bank or other financial professional, who specializes in business development, is a step in the right direction. This business viability calculator may help guide your understanding of how much capital is needed during the first months of your business.
4. Leverage the right legal entity
Starting a business involves understanding how your business will be structured. In other words, you need to choose the right legal entity. The following are the five most common forms of businesses, according to the Internal Revenue Service (IRS):
- Sole proprietorship
- S Corporation
- Limited Liability Company (LLC)
The differences between structures concern ownership, liability, and types of taxation associated with each one. Choosing which structure is best for your business is based on how many people will own any percentage of it and what the liability will be for those in this position. For a quick side-by-side view of the corresponding ownership, liability, and tax realities for each type of entity, check out this helpful business structure comparison chart.
5. Make it official
Once you've established your business structure, you'll need to register your business. In most cases, registering simply involves filing your business name with your state’s Department of Corporations. According to the U.S. Small Business Administration (SBA), if you decide to do business using your own name, rather than a business name you've created, you do not need to register your business. However, you may want to check with a business attorney to learn about any potential pros and cons if you are considering using your name as your business name. It is important to note that failing to register your business means potentially losing out on a variety of legal and tax benefits, as well as jeopardizing personal liability protection.
6. Meet your mentor
Take the time to connect with someone who not only understands the challenges of starting a small business, but will also encourage your success along the way. The ideal mentor will offer insight, support, and honest feedback about your plans, progress, and potential. If you do not currently have a mentor, consider reaching out to your banker, as they could be a reliable resource to help you find one. Choose wisely and make it a priority to meet with a mentor before launching your business.
7. Rally the troops
As you build your business, you want to also build your team. Keep in mind that your dream team isn't represented only by those working in the business with you (your employees, contractors, and freelancers). It also includes those working with you on the business: your business banker, attorney, accountant, insurance broker, and IT service provider. Each of these professions offers necessary assistance to business owners as their business grows and develops. Developing these relationships with trusted advisors will increase the business’s likelihood of success.
8. Cast a wide net
In these early stages of your business, and for as long as you own your business, it’s critical to schedule time regularly and frequently to network with like-minded business owners. Establishing a solid network will offer you the benefit of learning from others and future knowledge sharing.
9. Embrace outside expertise to empower and elevate your business
As a new business owner, you need to focus on working in your business, rather than working on your business. These sound the same but are vastly different. Working in your business means immersing yourself in providing your product, service, or solution to your clients and being available for them. Working on your business involves managing payroll and handling human resources, for instance. Networking with experts in these fields may help your business grow without interruption or undue stress.
10. Be bold
Starting a new business means staring down considerable odds and forging ahead anyway. Just how considerable? Entrepreneur magazine recently published the following small business failure rate: “According to data from the Bureau of Labor Statistics, as reported by Fundera, approximately 20 percent of small businesses fail within the first year. By the end of the second year, 30 percent of businesses will have failed. By the end of the fifth year, about half will have failed. And by the end of the decade, only 30 percent of businesses will remain — a 70 percent failure rate.” However, those numbers fail to reflect the common errors and oversight committed by so many small business owners at the start. By following each of the steps as outlined above and committing to the hard work and dedication every small business demands, you will be better positioned to realize and sustain your own success.
Connect with Cambridge Savings Bank
At Cambridge Savings Bank, we believe that fortune has long favored, and will continue to favor, the bold. We also believe in bolstering your odds of success with clear-eyed planning and professional collaboration. For more information about how to successfully launch your business, we invite you to contact a Cambridge Savings Bank business banker today.