How to start a small business? you will find the complete answer in this article. Every person in the world has a special gift that can be exploited to conduct to a better life. There are nearly 28 million small businesses in the United States, generating a whopping 99.7 percent of all U.S. businesses, according to the Small Business Administration. You can be motivated by one of the popular reasons to start a small business, including having a unique business idea, designing a career that has the potential to grow with you, working toward financial independence, and investing in yourself — it’s no wonder that small businesses are everywhere.
Unfortunately not every small business is positioned for success. Practically, only about two-thirds of businesses with employees survive at least two years, and about half survive five years. So you may be in for a real challenge when you decide to take the plunge, ditch your day job, and become a business owner. The stage is often set in the beginning, so making sure you follow all of the necessary steps when starting your business can set the foundation for success.
Here are 11 steps that are required to start a small business successfully. Take all these steps respectfully and you’ll be on your way to successful small business ownership.
Step 1: Want To Start a Successful Small Business? Find a Special Need
Eventually you have already identified a business idea, so now it’s time to balance it with a little reality. What is the success potential of your business idea? You will need to run your business idea through a validation process before you go any further.
In order to build a successful small business you must solve a problem, fulfill a need, or offer something the market wants.
There are various ways you can identify this need, including research, focus groups, and even trial and error. As you explore the market, some of the questions you should answer include:
- Is there a real need for your envisaged products/services?
- Who needs it, are the wiling to pay for your solutions?
- Are there other competitors offering similar products/services now?
- What is the competition like?
- How will your business behave in the market?
Step 2: Create a Competitive Advantage in order to start a successful small business
When you have chosen your business niche it’s crucial to research the competition in that market. In order to dominate the market you need to define your competitive advantages against your competitors.
Competitive advantage is the group of factors that allow a company to produce goods or services better or more cheaply than its competitors. These factors allow the productive entity to generate more sales or superior margins compared to its market rivals.
Competitive advantages produce greater value for a company and its shareholders because of certain strengths or conditions. The more unsurpassable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.
Step 3: A Good Business Plan Is The Key of Successful Small Business
Nothing valuable is possible without a well-designed plan, especially the business. The future prosperity of your business crucially depends on your business plan. It is the principal document on the start of your business as a written description of your business’s future, a document that tells what you plan to do in the beginning and what objectives you need to set. Your business plan must be highly realistic and based on the experience of other existing businesses.
Business plans are inherently strategic, its a clear vision about the potential success of your business. You start here, today, with certain resources and abilities invested. And you want to obtain some objectives, a point in the future (usually three to five years out), at which time your business will have a different set of resources and abilities as well as greater financial and economic situation.
Step 4: Your Small Business Needs a Good Finances Management
Starting a small business doesn’t have to obligate a huge investment, but it will involve some initial investment as well as the ability to cover ongoing expenses before you are turning a profit. You need to calculate all your startup costs for your business (licenses and permits, equipment, legal fees, insurance, branding, market research, inventory, trademarking, grand opening events, property leases, etc.), as well as you variable expenses during the first year to keep your business running (rent, utilities, marketing, and advertising, production, supplies, employee salaries, your own salary, etc.).
Those numbers combined are the initial investment you need.
Now that you have a rough number in mind, there are a number of ways you can fund your small business, including:
- Small business loans
- Small business grants
- Angel investors
You can also envisage getting your business off the ground by bootstrapping, using as little capital as necessary to start your business. You may find that a combination of the paths listed above works best. The goal here, though, is to work through the options and create a plan for setting up the capital you need to get your business off the ground.
Step 5: Pick a Business Structure
Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The business entity you choose will impact many factors from your business name, to your liability, to how you file your taxes.
You may choose an initial business structure, and then reevaluate and change your structure as your business grows and needs change.
Depending on the complexity of your business, it may be worth investing in a consultation from an attorney or CPA to ensure you are making the right structure choice for your business.
Step 6: Pick and Register Your Business Name
Your business name expresses the mission of your business and plays a crucial role in almost every aspect of your business, so you have to select it wisely. Make sure you think through all of the potential implications as you explore your options and choose your business name.
Once you have chosen a name for your business, you will need to check if it’s trademarked or currently in use. Then, you will need to register it. A sole proprietor must register their business name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically register their business name when the formation paperwork is filed.
Don’t forget to register your domain name once you have selected your business name. Try these options if your ideal domain name is taken.
Step 7: Obtain Licenses and Permits
Paperwork is a part of the process when you start your own business.
There are a variety of small business licenses and permits that may apply to your situation, depending on the type of business you are starting and where you are located. You will need to research what licenses and permits apply to your business during the start-up process.
Step 8: Set Up Your Accounting System
Small businesses run most effectively when there are systems implemented. One of the most important systems for a small business is an accounting system.
Your accounting system is necessary in order to create and manage your budget, set your rates and prices, conduct business with others, and file your taxes. You can set up your accounting system yourself, or hire an experienced accountant. If you decide to get started on your own, make sure you consider these questions that are vital when choosing accounting software.
Step 9: Determine Your Business Location
Your business location is one of factors that leads you to success. You have to choose a location accordingly to your potential clients’ needs.
You will need to think about your location, equipment, and overall setup, and make sure your business location works for the type of business you will be doing. You will also need to reflect if it makes more sense to buy or lease your commercial space.
Step 10: Create The Team of Your Successful Business
The good personnel is indispensable for your success. Your employees must be motivated and share your aspiration for success. If you will be hiring employees, now is the time to start the process. Make sure you take the time to define the positions you need to fill, and the job responsibilities that are part of each position. The Small Business Administration has an excellent guide to hiring your first employee that is useful for new small business owners.
If you are not hiring employees, but instead outsourcing work to independent contractors, now is the time to work with an attorney to get your independent contractor agreement in place and start your search.
Finally, if you are a true solo entrepreneur hitting the small business road alone, you may not need employees or contractors, but you will still need your own support team. This team can be comprised of a mentor, small business coach, or even your family, and serves as your go-to resource for advice, motivation, and reassurance when the road gets bumpy.
Step 11: Create a Promotion Plan
Once your business is up and running, you need to start attracting clients and customers. You’ll want to start with the basics by writing a unique selling proposition (USP) and creating a marketing plan. Then, explore as many small business marketing ideas as possible so you can decide how to promote your business most effectively.
Once you have accomplished these business start-up steps, you will have all of the most important bases covered. Don’t forget that success doesn’t happen accidentally, only your hard work and commitment can build your success in the business world. You have to outwork all your competitors and the success will be yours.