How to Start a Business

If you aren't sure where you want to form your business, check out our comprehensive guide below to learn the key steps involved in any state.

To Start a Business follow these Seven Simple Steps:

Step 1: Choose the Right Business Idea

Choosing the right business idea is among the most important decisions you will make as an entrepreneur. Many fail to get their business off the ground because they select a business idea that does not match their needs or goals.

Understand Yourself and Your Situation

How much time and money are you willing to risk? Starting a business involves a certain amount of sacrifice and risk. Understand how much you are comfortable risking based on your personal circumstances. In some cases, you may be better off choosing a business that requires a lower amount of startup capital or that you can manage on a part time basis.

Are you motivated to put in significant effort? Starting a business is a marathon, not a sprint. There are no get-rich-quick schemes. Most businesses will take at least a couple of years to grow and develop. You need to select an idea that you are passionate about and that meets your long term goals. This will sustain you in the long term.

Research and Select a Business Idea

Once you have figured out your goals, constraints and motivations, you can use our business ideas tool. This tool will help you identify potential business opportunities that are consistent with your goals and interests. It will also provide you with the initial research you need understand what is involved in growing that idea into a proper business.

Step 2: Plan Your Business

At this point, you should think through some of the key details of your business idea.

As you begin to research your business, we recommend that you use our business model canvas tool. This tool will help you focus and structure your research into the business idea. At the end of this planning process, you should understand whether the idea will work for you or not.

The business model canvas will cover the following points:

  • Product/service: What are you selling? What problem does your product/service solve? How is your solution different/better from what other 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: What roles will you need to hire and what partnerships will you need to form in order to establish and grow your business?
  • Operations: 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?

Next Steps

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.

Optional: Create a 5-10 page business plan. This is critical if you plan to raise outside funds. Our free business plan tool guides you through the process of drafting a business plan from start to finish. You can also use a paid service such as LivePlan to form your business plan.

Step 3: Form a Company

Organizing your business into a proper business structure has two major advantages:

  • Increased credibility
  • Protection from personal liability in the event your business is sued

There are many ways to formally structure your business. For most small businesses, forming an LLC is a great option. In comparison to other business structures, LLCs are more flexible, are subject to fewer regulations, and have favorable tax treatment.

If you do not form a legal business entity, your business will automatically be treated as a sole proprietorship (if you are in business alone) or a partnership (if you have business partners) and you will be held personally responsible for all debts and liabilities of your business.

Our LLC formation guide provides a comprehensive overview of the formation process, registering for federal and local taxes, and business licenses.

Step 4: 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 reduces personal liability 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.
  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.
  3. Set up business accounting to track your business spending and comply with the law. Read our business accounting guide to learn how great accounting software makes it easy to keep track of finances.

Step 5: 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:
    • Start by choosing a great name for the product or service you are selling. Remember that you can file a DBA if you prefer to do business under a name other than your business's legal name.
    • Follow our branding guide to define your brand, create a logo, and learn how to use your brand consistently.
  2. Secure a domain and social handles: Buy a web domain and reserve appropriate social media handles (Facebook, Twitter, etc) before promoting your brand.
  3. 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.

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After registering a domain name, consider setting up a professional email account ( Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

Step 6: 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 (
    • After registering a domain name, consider setting up a professional email account ( Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
    • 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 7: 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.