How to Start a Business: A Step-by-

Step Guide
By Andreas Rivera, Staff WriterJune 7, 2018 07:30 am EST

Credit: Gwoeii/Shutterstock

So you want to start your own business. Maybe you're really knowledgeable and passionate
about something, or you've found a way to fill a gap in the marketplace. Wherever your
interests lie, there's almost certainly a way to turn it into a business.

This journey isn't an easy one, though: Starting a business requires a lot of time, effort and
hard work, and many would-be entrepreneurs end up failing. But if your company survives,
the rewards are well worth the obstacles you'll face on the road to success.

There's a lot to consider and plan before you launch, and it's important to prepare yourself for
entrepreneurship. If you think you're ready to start your first business, here's a step-by-step
overview of what you need to do to make it happen.

In this article…
1. Refine your idea
2. Build a business plan
3. Assess your finances
4. Determine your legal business structure
5. Register with the government and IRS
6. Purchase an insurance policy
7. Build your team
8. Choose your vendors
9. Brand yourself and advertise
10. Grow your business
1. Refine your idea
If you're thinking about starting a business, you likely already have an idea of what you want
to sell, or at least the market you want to enter. Do a quick search for existing companies in
your chosen industry. Learn what current brand leaders are doing, and figure out how you can
do it better. If you think your business can deliver something other companies don't (or
deliver the same thing, but faster and cheaper), you've got a solid idea and are ready to create
a business plan.

Another option is to open a franchise of an established company. The concept, brand

following and business model are already in place; all you need is a good location and the
means to fund your operation.

2. Write a business plan

Now that you have your idea in place, you need to ask yourself a few important questions:
What is the purpose of your business? Who are you selling to? What are your end goals?
How will you finance your startup costs? These questions can be answered in a well-written
business plan.

A lot of mistakes are made by new businesses rushing into things without pondering these
aspects of the business. You need to find your target customer base. Who is going to buy
your product or service? If you can't find evidence that there’s a demand for your idea, then
what would be the point?

Conducting thorough market research on your field and demographics of potential clientele is
an important part of crafting a business plan. This involves conducting surveys, holding focus
groups and researching SEO and public data. A guide to conducting market research can be
found on our sister site Business.com.
A business plan helps you figure out where your company is going, how it will overcome any
potential difficulties and what you need to sustain it. A full guide to writing your plan can be
found here, and when you're ready to put pen to paper, these free templates can help.

3. Assess your finances

Starting any business has a price, so you need to determine how you're going to cover those
costs. Do you have the means to fund your startup, or will you need to borrow money? If
you're planning to leave your current job to focus on your business, do you have some money
put away to support yourself until you start making a profit? Find out how much you're
going to need.
Experts generally agree that startup businesses often fail because they run out of money too
quickly before turning a profit. It's never a bad idea to overestimate the amount of startup
capital you need, as it can be a while before the business begins to bring in a sustainable
revenue.

If you need financial assistance, a commercial loan through a bank is a good starting point,
although these are often difficult to secure. If you are unable to take out a bank loan, you
can apply for a small business loan through the Small Business Administration (SBA)
or an alternative lender. Startups requiring a lot more funding up front may want to consider
an investor. Investors usually provide several million dollars or more to a fledgling company,
with the expectation that the backers will have a hands-on role in running your business.
Alternatively, you could launch an equity crowdfunding campaign to raise smaller
amounts of money from multiple backers.
You can learn more about each of these capital sources and more in our guide to startup
finance options.

4. Determine your legal business structure

Before you can register your company, you need to decide what kind of entity it is. Your
business structure legally affects everything from how you file your taxes to your personal
liability if something goes wrong.

If you own the business entirely by yourself and plan to be responsible for all debts and
obligations, you can register for a sole proprietorship. Be warned that this route can
directly affect your personal credit. Alternatively, a partnership, as its name implies,
means that two or more people are held personally liable as business owners. You don't have
to go it alone if you can find a business partner with complimentary skills to your own.
If you want to separate your personal liability from your company's liability, you may want to
consider forming one of several types of corporations. This makes a business a separate
entity apart from its owners, and therefore, corporations can own property, assume liability,
pay taxes, enter into contracts, sue and be sued like any other individual. One of the most
common structures for small businesses, however, is the limited liability
corporation (LLC). This hybrid structure has the legal protections of a corporation while
allowing for the tax benefits of a partnership.
Ultimately, it is up to you to determine which type of entity is best for your current needs and
future business goals. More details about the different business structures can be found here.

5. Register with the government and IRS

To become an officially recognized business entity, you must register with the government.
Corporations will need an "articles of incorporation" document, which includes your
business name, business purpose, corporate structure, stock details and other information
about your company. Otherwise, you will just need to register your business name, which can
be your legal name, a fictitious "Doing Business As" name (if you are the sole proprietor), or
the name you've come up with for your company. You may also want to take steps
to trademark your business name for extra legal protection.
After you register your business, you may need to get an employer identification
number (EIN) from the IRS. While this is not required for sole proprietorships with no
employees, you may want to apply for one anyway to keep your personal and business taxes
separate, or simply to save yourself the trouble later on if you decide to hire someone else.
The IRS has provided a checklist to determine whether you will require an EIN to run your
business. If you do need an EIN, you can register online for free.
You also will need to file certain forms to fulfill your federal and state income tax
obligations. The forms you need are determined by your business structure. A complete list of
the forms each type of entity will need can be found on the SBA website. You can also
find state-specific tax obligations there. Some businesses may also require federal or
state licenses and permits to operate. You can use the SBA's database to search for
licensing requirements by state and business type.
"You might be tempted to wing it with a PayPal account and social media platform, but if
you start with a proper foundation, your business will have fewer hiccups to worry about in
the long run," said Natalie Pierre-Louis, attorney with NPL Consulting.

6. Purchase an insurance policy

It might slip your mind as something you'll "get around to" eventually, but purchasing the
right insurance for your business is an important step that should happen before you officially
launch. Dealing with such incidents as property damage, theft or even a customer lawsuit can
be costly, and you need to be sure that you're properly protected.

If your business will have employees, you will, at minimum, need to purchase workers'
compensation and unemployment insurance. You may also need other types of coverage
depending on your location and industry, but most small businesses are advised to purchase
general liability (GL) insurance, or a business owner's policy. GL covers property damage,
bodily injury and personal injury to yourself or a third party.

If your business provides a service, you may also want to consider professional liability
insurance. It covers you if you do something wrong or neglect to do something you should
have done while operating your business. Learn more about the types of insurance policies
your business might need here.

7. Build your team

Unless you're planning to be your only employee, you're going to need to hire a great team to
get your company off the ground. Joe Zawadzki, CEO and founder of MediaMath, said
entrepreneurs need to give the "people" element of their businesses the same attention they
give their products.
"Your product is built by people," Zawadski said. "Identifying your founding team,
understanding what gaps exist, and [determining] how and when you will address them
should be top priority. Figuring out how the team will work together ... is equally important.
Defining roles and responsibility, division of labor, how to give feedback, or how to work
together when not everyone is in the same room will save you a lot of headaches down the
line."

8. Choose your vendors

Running a business can be overwhelming, and you're probably not going to be able to do it
all on your own. That's where third-party vendors come in. Companies in every industry from
HR to business phone systems exist to partner with you and help you run your business
better.

When you're searching for B2B partners, you'll have to choose very carefully. These
companies will have access to vital and potentially sensitive business data, so it's critical to
find someone you can trust. In our guide to choosing business partners, our expert
sources recommended asking potential vendors about their experience in your industry, their
track record with existing clients, and what kind of growth they've helped other clients
achieve.
Business News Daily offers reviews of the best vendors across a wide range of B2B product
and service categories. Visit our Find a Solution section to find our recommendations.

Before you start selling your product or service, you need to build up your brand and get a
following of people ready to jump when you open your literal or figurative doors for
business.

Create a logo that can help people easily identify your brand, and be consistent in using it
across all of your platforms, including your all-important company website. Use social
media to spread the word about your new business, perhaps as a promotional tool to offer
coupons and discounts to followers once you launch. Be sure to also keep these digital assets
up to date with relevant, interesting content about your business and industry.

Creating a marketing plan that goes beyond your launch is essential to building a clientele by
continually getting the word out about your business. This process, especially in the
beginning, is just as important as providing a quality product or service.

For more information on creating an effective marketing plan for your business, visit our
guide here.

10. Grow your business

Your launch and first sales are only the beginning of your task as an entrepreneur. In order to
make a profit and stay afloat, you always need to be growing your business. It's going to take
time and effort, but you'll get out of your business what you put into it.

Collaborating with more established brands in your industry is a great way to achieve growth.
Reach out to other companies or even influential bloggers and ask for some promotion in
exchange for a free product sample or service. Partner with a charity organization and
volunteer some of your time or products to get your name out there. In this article,
Business News Daily offers some suggestions for rapid growth.
John Mansour, CEO and co-founder of B4, advised new entrepreneurs to learn how to deal
with mistakes without dwelling on them.

"Mistakes are … going to happen, and how you deal with them and learn from them is
really one of the major keys to success," said Mansour. "If you can balance limiting your
mistakes, learning from them and moving forward as soon as possible, then I think you can
truly be dangerous."

Additional reporting by Nicole Fallon. Some source interviews were

conducted for a previous version of this article.