8 Steps to Starting Your Own Business

 11 Min. Read  Starting  By: Candice Landau

This article is part of our “Business Startup Guide”—a curated list of our
articles that will get you up and running in no time!
People often ask us for a list of steps they can use to start their own business.
From business type to business model to physical location, there are so many
variables!

However, there are things that every business needs to do to get off the
ground. So, here are the eight key steps you need to take to start your own
business. Just remember, be flexible. Every business is unique and you may
need to refine this list as you go.

Want the full list? Our Business Startup Checklist has over 80 tasks to walk
you through starting a business.

1. Conduct a personal evaluation

“Know yourself, and work in a job that caters to your strengths. This
knowledge will make you happier.”
– Sabrina Parsons
Begin by taking stock of yourself and your situation:

 Why do you want to start a business? Is it money, freedom and

flexibility, to solve a problem, or some other reason?
 What are your skills?
 What industries do you know about?
 Do you want to provide a service or a product?
 What do you like to do?
 How much capital do you have to risk?
 Will it be a full-time or a part-time venture?

Your answers to these types of questions will help you narrow your focus.

This step is not supposed to dissuade you from starting your own business.
Rather, it’s here to get you thinking and planning. In order to start a successful
business, passion alone isn’t enough.

You need to plan, set goals, and above all, know yourself. What are your
strengths? What are your weaknesses? How will these affect day-to-day
operations? You could conduct a SWOT analysis on yourself to figure this out.

As you get started, your business will likely dominate your life so make sure
that what you’re doing is stimulating and challenging, but not completely
outside of your expertise. You’re going to be in it for the long-haul. Use what
you learn from the SWOT analysis to think through what you want your life to
be like, not just what you want from your business.

Some good questions to ask yourself include:

 What would you do if money wasn’t an issue?

 Is money really important? Or rather, is making a lot of it really

important? If it is, you’re probably going to be cutting out a number of
options.

 What really matters to you?

 Do you have the support of your family, especially your immediate

family? They may have to make sacrifices at the beginning, so it’s important
to have them behind you.

 Who do you admire in business? Maybe there’s even someone in the

industry you’d like to go into. Why do you admire them? What are their
likable traits? What can you learn from them?

Answering these questions (and many more) about yourself and your abilities
isn’t necessarily going to ensure you’re successful, but it will get you thinking
about your goals and about what motivates and inspires you. Use this time to
make sure that you are matching the business you want to start to your
personal aspirations.
Be sure to take our quiz to find out if you’re entrepreneur material, too.

2. Analyze your industry

“The more you know about your industry, the more advantage and protection
you will have.”
– Tim Berry
Once you decide on a business that fits your goals and lifestyle, evaluate your
idea. Who will buy your product or service? Who will your competitors be? At
this stage, you also need to figure out how much money you will need to get
started.

Your “personal evaluation” was as much a reality check as a prompt to get

you thinking. The same thing applies when it comes to researching your
business and the industry you’d like to go into.

There are a number of ways you can do this, including performing general
Google searches, speaking to people already working in your target industry,
reading books by people from your industry, researching key people, reading
relevant news sites and industry magazines and taking a class or two (if this is
possible).

If you don’t have time to perform the research or would like a second opinion,
there are people you can go to for help, like government departments and
your local SBDC.
There are also a number of less traditional sources worth turning to:

 Advertising representatives for statistics and data on your competition

or the industry in general

 List brokers sell mailing or email lists based on demographic attributes.

Like, if you think your target market is people making above a certain
income in south Texas, a list broker may be able to tell you how many
people fit that criteria, to give you a sense of how big your target market
actually is.

 Industry suppliers (again to get a sense of demand and for market

information)

 Students who will likely be happy to perform research for you at an

affordable fee.

3. Evaluate your target audience

Validate your business idea by creating a pitch page.

To determine how attractive your prospective market really is (your own

desires aside for the moment), we suggest doing a market analysis.

It will guide your research as you think about:

 How urgently do people need the thing you’re selling or offering right
now?
 What’s the market size? Are there already a lot of people paying for
products or services similar to yours? Have you honed in on who exactly
your target market is? Being specific will help you focus your marketing
message and investment.
 How easy is it (and how much will it cost you) to acquire a customer? If
you’re selling enterprise software, this may require a significantly larger
investment than a coffee shop.
 How much money and effort will it cost to deliver the value you would
like to be offering?
 How long will it take to get to market? A month? A year? Three years?
 How much up-front investment will you need before you can begin?
 Will your business continue to be relevant as time passes? A business
that repairs iPhone X screens will only remain relevant so long as the
iPhone X sticks around. If your business is only relevant for a specific
period of time, you will also want to consider your future plans.

If you like, you can even take things a step further and consider the consumer
needs currently not being met by businesses in the industry. This is a good
time to take a look at potential competitors. And remember, the presence of
competitors is oftentimes a good sign! It means that the market for your
product or service already exists, so you know that you have potential
customers who are willing to spend money on your product or service.

While you’ve got the time, learn as much as you can about your competitors,
about what they provide to their customers, how they attract attention, and
whether or not their customers are happy. If you can figure out what’s missing
before you even get started, your job will be made that much easier when you
do finally set up shop.
4. Set up your business
Realistically, registering your business is the first step toward making it real.
However, as with the personal evaluation step, take your time to get to know
the pros and cons of different business entities.

If at all possible, work with an attorney to iron out the details. This is not an
area you want to get wrong. You will also need to get the proper business
licenses and permits. Depending upon the business, there may be city,
county, or state regulations as well. This is also the time to check into
insurance and to find a good accountant.

Types of business formations include:

 Sole proprietorship

 Partnership

 Corporation

 Limited Liability Company (LLC)

Spend some time getting to know the pros and cons of each business
formation. If you need help, we’ve got a full guide on Legal Entities, Licenses,
and Permits.
While incorporating can be expensive, it’s well worth the money. A corporation
becomes a separate entity that is legally responsible for the business. If
something goes wrong, you are less likely to be held personally liable.

Other things you will need to do include deciding on a business name and

researching availability for that name.

5. Start the planning process

“Our goals can only be reached through the vehicle of a plan, in which we
must fervently believe, and upon which we must vigorously act. There is no
other route to success.” 
– Pablo Picasso
If you will be seeking outside financing, a business plan is a necessity. But,
even if you are going to finance the venture yourself, a business plan will help
you figure out how much money you will need to get started, what it will take
to make your business profitable, what needs to get done when, and where
you are headed.

In the simplest terms, a business plan is a roadmap—something you will use

to help you chart your progress and that will outline the things you need to do
in order to reach your goals. Rather than thinking of a business plan as a hefty
document that you’ll only use once (perhaps to obtain a loan from a bank),
think of it as tool to manage how your business grows and achieves its goals.
While you might use your business plan as part of your pitch to
investors and banks, and to attract potential partners and board members,
you will primarily use it to define your strategy, tactics, and specific activities
for execution, including key milestones, deadlines and budgets, and cash
flow.

In fact, the business plan does not have to be a formal document at all if you
don’t need to present your plan to outsiders. Instead, your plan can follow
a Lean Planning process that involves creating a pitch, forecasting your key
business numbers, outlining key milestones you hope to achieve, and regular
progress checks where you review and revise your plan.

If you aren’t presenting to investors, don’t think of this as a formal pitch

presentation, but instead a high-level overview of who you are, the problem
you are solving, your solution to the problem, your target market, and the key
tactics you will use to achieve your goals.

Even if you do not think you need a formal business plan, you should go
through the planning process anyway. The process will help to uncover any
holes or areas you have not thought through well enough. If you do need to
write a formal business plan document, you should follow the outline below.

The standard business plan includes nine parts:

 The Executive Summary

 Target Market
 Products and Services
 Marketing and Sales Plan
 Milestones and Metrics
 Company Overview
 Management Team
 Financial Plan
 Appendix

If you would like detailed information on how to write a business plan to

present to banks or funders, there are plenty of online resources, including our
own comprehensive guide.

You will also find hundreds of sample plans for specific industries on this very
website. Use them at your leisure but be prepared to adapt them to suit your
precise needs. No two businesses are the same!
Types of business plans:

If you are simply creating a business plan in order to stimulate a discussion

with potential partners and associates, you may want to consider opting for a
“startup plan,” also known as a feasibility plan. As your business grows you
can flesh out the sections as you see fit.

In contrast to the standard plan and the startup plan, is the operations or

annual plan. This type of plan is used for internal purposes and primarily
reflects the needs of the members of the company. This type of plan is not
intended for banks and outside investors. You will use it either to plan your
company’s growth or expansion or to set company-wide priorities.

If the latter is true and you are using the plan in order to direct your internal
strategy, you are creating a strategic plan, a type of plan that will include a
high-level strategy, tactical foundations of the strategy, specific
responsibilities, activities, deadlines and budgets, and a financial plan.

6. Have a plan for funding

Depending on the size and goals of your venture, you may need to seek
financing from an “angel” investor or from a venture capital firm. But, most
small businesses begin with a loan, financing from credit cards, help from
friends and family, and so on.

Investment and lending options include:

 Venture capital

 Angel investment (similar to venture capital)

 Commercial (banks)

 Small Business Administration (SBA) Loans

 Accounts receivable specialists

 Friends and family

 Credit cards

For in-depth information on funding, see our complete guide on how to get
your business funded, which includes detailed information on each of the
above-mentioned options.

Note: A beautifully fleshed-out business plan does not guarantee you will get
funded. In fact, according to Guy Kawasaki, the business plan is one of the
least influential factors when it comes to raising money.

To stand a realistic chance of getting hold of the funds you need to get
started, you’d be better off first focusing on your “pitch.” Not only will it be
easier to fix because it contains less, but you’ll also get feedback on it—most
investors don’t bother reading the full business plan, though they may still
expect you to have it.

It’s also much easier to turn a pitch into a business plan than it is to pare back
your plan.
7. Set up your space
Your business plan has been laid out, the money is in the bank, and you’re
ready to go. If your business is online and you won’t need a storefront, you’re
probably looking at building your website and choosing a shopping cart
solution. Maybe you’ll be able to work out of a home office or a co-working
space instead of renting or buying office space. But if your business needs a
dedicated brick and mortar location, there are many considerations.  

Finding a location. Negotiating leases. Buying inventory. Getting the phones

installed. Having stationery printed. Hiring staff. Setting your prices. Throwing
a grand opening party.

Think through each of these steps carefully. Your business location will dictate
the type of customer you attract, what types of promotions you can run, and
how long it will take you to grow. While a great location won’t necessarily
guarantee your success, a bad location can contribute to failure.

As you’re thinking about where you want to set up shop (including the
city and state), consider the following:

 Price: Can you realistically afford to be where you want to be? If not, or

if you’re cutting it fine, keep looking.
 Visibility: Will people easily be able to find you? Will they see your
promotions and offers? Are you in the center of town or further out? How
will this affect you?

 Access to parking or public transportation: Can people easily find

you from available parking options and transportation routes? If they have
to look too hard, they may give up.

 Distribution of competitors: Are there many competitors close to you?

If so, this may be a sign that the location is premium for the clientele you
wish to attract. It may also mean you do no business. Consider carefully
how you wish to approach this type of situation.

 Local, city, and state rules and regulations: Look into regulations, as

areas may be more stringent than others. Ensure there are no restrictions
that will limit your operations or that will act as barriers to your store.

Your marketing will set the stage for the future of your store. It will set
expectations, generate hype (if done well), bring business in from day one and
ensure that people know where you are and what they can expect from you.

Your store’s layout, design and placement of your products will decide not
only the overall atmosphere of the store but what products people see and
buy. Consider the areas you want well lit; how you will display products (if
necessary); what various colors will make people feel, and how people will
move through your store.

There are reams of literature on why we buy what we do, all of it fascinating
and much of it informative. Begin thinking about how you shop—this will get
you to think more critically about your own store.

Consider: placing products low on shelves will mean that people are unlikely
to see them and therefore unlikely to buy them, whereas placing them at eye-
level will mean they’re seen first and are therefore probably more likely to be
purchased.

Your choice of products and how you decide to price them will create a
reputation. Rather than stock everything of a similar price range from one or
two catalogs, consider only choosing those items that will create the feel you
want to become known for.
If you’re a service business, build your services in a similar manner,
considering your different clientele and the value they will get from the
different options you have on offer. If a very affordable package will cheapen
your brand, consider excluding it. If a pricier option will limit your clientele too
drastically, maybe cut back on some of the services included.

8. Prepare for trial and error

Whether you’re starting your first or your third business, expect to make
mistakes. This is natural and so long as you learn from them, also beneficial.

If you do not make mistakes, you do not learn what to do less of and what to
emphasize. Be open-minded and creative, adapt, look for opportunities, and
above all, have fun!

The great thing about owning your own business is that you get to decide
what you want to do and where you’ll grow.
 Candice Landau


Candice is a freelance writer, jeweler, and digital marketing hybrid. You can learn more about her on
her personal website or reach out to her on Twitter @candylandau.

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