Step 1: Choose Whether to Start a Business

Entrepreneurship can be highly rewarding, but it isn’t for everyone. Determine whether you are ready to start your own business by answering three questions:

Are you willing to risk time and money?

Starting a business involves sacrifice and certain risks. Are you prepared to risk your money to get started? Will you put other career ambitions on hold? Are you willing to sacrifice time with friends/family?

Are you motivated to put in significant effort?

To succeed as an entrepreneur, you will need to remain focused and determined in the face of challenge and uncertainty. Are your reasons for going into business rooted in needs, goals or passions that will keep you motivated when challenges arise?

Do you have a strong support system?

As you start and grow your business, you will depend upon friends, family and mentors for support, advice and assistance. Do those closest to you support your plan? Will they help you launch your business and stand by you emotionally and financially if things don’t work out?

Step 2: Identify a Business Opportunity

Choosing a business is among the most important decision you will make as an entrepreneur. Follow four easy steps to discover the business that is right for you.

  1. List some things you love doing and brainstorm ways to turn those passions into marketable products or services. You can discover hundreds of great business opportunities using our business ideas tool.
  2. Consider your goals and constraints. Narrow your search to businesses with the following characteristics:
    • The day-to-day work is compatible with the kind of lifestyle you desire for yourself.
    • You have or can obtain the time, skills and resources needed to get started.
    • The business can support your financial needs.
  3. Do some initial research to confirm that your business idea is viable:
    • Find out what current industry leaders are doing. Determine if you can do it better, cheaper, or more efficiently. If not, determine if you can reach a new group of customers that is currently underserved.
    • Connect with a few potential customers. Confirm whether there is real demand for the product/service you envision selling.
  4. If in doubt, follow your passion. Motivation is the key to success as an entrepreneur. Go with a business that keeps you excited and motivated.

Step 3: Plan your Business

Planning your business requires patience and care, but shouldn’t feel intimidating. The goal is to understand the steps and resources needed for your business to succeed. Doing so will help you clarify your goals and stay focused as you build your business. Plan your business in four easy steps.

  1. Review the key aspects of your business:
    • Product/service:What are you selling? What problem does your product/service solve? How is your solution different/better from what others companies are selling and/or what your potential customers are already doing?
    • Customers: Who are your customers? How will you meet the needs of these customers? How much will your customers pay?
    • Sales & Marketing: How will you sell your product and reach your customers? How many customers will you sell to in year 1? How about years 2 and 3?
    • Organization (key resources): What roles will you need to hire and what partnerships will you need to form in order to establish and grow your business?
    • Operations (key activities): What does your company need to accomplish in order to succeed? What is your strategy and how will you measure performance?
    • Financial: What is your cost structure? How much revenue will you earn from each new customer? How profitable will your business be? How much money will you initially need to start your business?

    To answer such questions, you’ll need to make a number of assumptions. Ensure your assumptions are consistent and realistic. If you lack confidence in some of your answers, pay close attention to those areas of your business as you move forward.

  2. Write a summary of all key aspects of your business. This will help you organize your thoughts and provide you roadmap that you will want to revisit as you build your business. Use our business model canvas tool to record, update and publish all of your assumptions in a clear and concise format.
  3. Optional: Create a 5-10 page business plan. This is critical if you plan to raise outside funds. Our business plan tool guides you through the process of drafting a business plan from start to finish. If you’re looking for even more help, Liveplan offers advanced business planning software and access to over 500 example business plans for a low monthly fee
  4. Never stop planning! Planning is not a one time task! As you grow your business, continue to test your assumptions and refine your plans regularly. This will help you identify risks and spot opportunities in advance.

Step 4: Form Your Company

Make your business official and protect yourself from liability by forming a business entity.

  • Optional: Consider hiring a business lawyer to help guide you through the process of forming your company.
  • Pick a legal name for your business. You will need a name to establish your new business. Don’t get too hung up if you haven’t found the perfect name. If you decide to change your business’ name later, you can do so easily by filing a DBA with your local county clerk’s office.
  • Select a business entity. You have several options when it comes to forming a business. If you do not to form a legal business entity, your business will automatically be treated as a proprietorship (if you are in business alone) or a partnership (if you have business partners) and you be held personally responsible for all debts and liabilities of your business. Alternatively, you can register an LLC or corporation. For most small businesses, forming an LLC is a great option. Advantages of forming an LLC include limited liability, flexible structure, less regulation, and favorable tax treatment.
  • Form your business. Our convenient guides walk you through the steps to form an LLC in all 50 states. Alternatively, you can have a professional service form an LLC or corporation for you:
  • Keep your business in good standing. Most states require LLCs and corporations to make annual filings and/or pay various taxes and fees. Failure to meet these requirements can result in automatic dissolution or revocation of your business entity. Our state specific guides list the periodic filing requirements for LLCs in all 50 states. Consider using a registered agent service INCFILE.COM to be notified of upcoming state filing requirements.
  • Obtain necessary licenses and permits. To operate your business legally, you may need to obtain special licenses or permits from federal, state and local government bodies. For example, restaurants likely need health permits, building permits, and signage permits. Three ways to determine your businesses’ licensing requirements include:

Step 5: Manage Your Finances

Effective money management will be critical to your success and minimize your legal risks. Get your finances in order in three steps:

  1. Separate business assets from personal assets. Separating your personal assets from company assets is necessary for personal asset protection and makes accounting much easier.
    • Set up a dedicated business bank account. Transfer all business funds into your business bank account and use this account exclusively to pay bills and cover payroll.
    • Apply for a dedicated business credit card. Don’t miss out on the significant benefits a business credit line will provide for your business.
    • Create a reimbursement policy for out-of-pocket expenditures made by you or your employees on behalf of your business. Consider using an online service to help you setup and administrate your reimbursement policy.
  2. Finance your business. New businesses require money to get started. Understand your financial requirements and make sure you have adequate financial resources to reach profitability. There are many ways to fund your business. If you are looking for ideas, check out our helpful guide.
  3. Set up business accounting to track your business spending and comply with law. You can manage your business accounting yourself by using free templates or by using a cloud accounting service. If you are not familiar with business finance, consider hiring a professional service to manage your accounting.

Step 6: Establish Your Brand

Branding is one of the most important parts of building your business. A strong brand will differentiate you from your competitors and issue a promise to your customers about the quality of your products and services. To get started building your brand:

  1. Create a unique brand identity:
  2. Consider trademarking your brand to protect your business identity. Filing for trademark protection is strongly advised if your brand is critical to the success of your businesses or if you are entering a highly competitive market.
  3. Purchase a branded URL and register social media handles (Facebook, Twitter, etc) before promoting your brand.

Step 7: Promote Your Business

You will need to create ways for potential customers and clients to learn about your business. Follow four simple steps to increase your businesses’ profile and start generating leads.

  1. Promote your brand and look professional by purchasing business cards and setting up a professional email (@yourcompany.com).
    • Get a professional email with Google apps. Also get access to the top business tools, cloud storage, and business-grade security. - Try it for free.
    • Moo.com sells high quality, low cost business cards.
  2. Launch a website so that potential customers can learn more about your business and find out how to contact you.
  3. Attend industry conferences. This is a great way to learn about your industry and find clients.
  4. Acquire new customers using proven digital marketing strategies.

Step 8: Build Your Team

If you want to grow your business, you will need a team to support you. Hire your first employee and start building your organization in six easy steps:

  1. Become familiar with your legal obligations as an employer. Our guide to hiring employees will bring you up to speed quickly.
  2. Recruit qualified job candidates. You owe it to your business to find and hire strong job applicants. Your earliest hires are especially important since they will play a role in defining your company’s culture.
    • Create professional job descriptions
    • Post your job openings within your personal and professional networks. Post a help wanted status on Facebook or LinkedIn can be a great way to generate high quality leads from sources your trust.
    • Post your jobs to online job boards and consider advertising your job openings in a local newspaper
    • Consider creating a jobs page on your company website to generate more qualified leads.
    • Review candidates and plan interviews with top candidates. CareerOneStop offers helpful guides covering best practices for screening candidates and conducting interviews.
  3. Prepare employment agreements. You can do this in a snap using our free business.
  4. Manage payroll. It is critical to pay your employees on time and in compliance with state and federal withholding and reporting laws. If you are on a tight budget, you can manage payroll yourself. However, this can become time consuming and may expose your business and employees to penalties if you make errors. Many small businesses prefer to have a professional service manage their payroll.
  5. Streamline HR As your team gets larger, you’ll want to streamline your employment procedures and may wish to offer benefit plans such as medical insurance and 401k accounts. A professional HR service can take care of this for you.