11 Steps to Start a Business

1. Find a business idea
2. Write your business plan
3. Secure financing to fund your business
4. Choose a business structure
5. Get federal and state tax ID numbers
6. Obtain a business license and permits
7. Open a business bank account
8. Get business insurance
9. Select your tools and software
10. Hire your team
11. Market your business

Whether it’s your first or tenth business, following these tried-and-true processes will assist you in finding and confirming your revenue-generating idea, devising a shipping strategy, and finally launching your good or service. This checklist manual is intended for business owners who want to comprehend the initial phases of launching a new enterprise.

1. Find a Business Idea

Choosing what you want your business to be is the first step in beginning one. You can approach the challenge of finding small company ideas methodically by relying on tried-and-true strategies that have produced positive results for other business owners. Make sure you conduct a market analysis to confirm that there is sufficient demand and that there is not an excessive amount of competition.

2. Write Your Business Plan

Writing a business plan, as the owner, can streamline the process of creating a firm by forcing you to sit down and think things through carefully. It also helps formalize your idea.

It’s crucial to have a solid understanding of your “known unknowns” because all it means is that you’re actively prioritizing finding a solution at the moment; this is preferable to being unprepared or caught off guard, especially if you find it difficult to respond to these questions while looking for funding.

Business plan outline

• Company name and description
• Market analysis
• Management and organization
• Products and services
• Customer segmentation
• Marketing plan
• Logistics and operations plan
• Financial plan

Choose a business name

For starters, your business name is a universal facet of your marketing—it shows up everywhere you do. Keep things simple and focused: find a name that makes it clear what you do, that’s short and memorable, and that aligns with your mission and vision statement. This isn’t an effortless task, but it’s very achievable with a bit of ingenuity. 

Some business structures require a doing business as (DBA) name.

When you successfully register a business name, don’t forget to look into trademarking.

Conduct market research

One of the best ways to start a business is to conduct a market analysis. To create a successful business plan, market research aims to provide a deeper understanding of your target market and rivals.

What’s the potential opportunity size?

Small markets are frequently undervalued by business owners. Yes, the size of the market should meet your goals, but there are a few other factors that affect how big an opportunity is in a given sector. For instance, founders who are focused on market size may overlook a lucrative opportunity if a product category has relatively few active users but the price of the product is quite high and necessitates repurchase.

Who’s your competition?

What does the market’s competitive environment look like? Are there many or few competitors? It’s frequently a sign that the market is established if there are several rival companies in your niche. That’s excellent news for guaranteeing there is a market, but it also means that you will need to (somewhat) differentiate what you have to offer in order to draw in customers and increase your market share.

Who is your target audience?

A group of people you intend to market your goods and services to is known as a target audience. It is simpler to find new consumers and attract interested shoppers to your website when you are aware of your target demographic. Creating your buyer personas in advance will help you achieve, from more social media engagement to a higher return on investment for your advertising.

3. Secure Financing to Fund Your Business

Your business plan will help determine how much money you’ll need to get up and running.

Common ways to fund your startup

• Business loans
  If you have a good personal credit history and need startup financing, a business loan from a lender could be a good idea.
• Business grants
  Grants are often given to target businesses based on a variety of factors including, veteran-owned, minority-owned, specific for-profit, women-run, and more. See the SBA Grant page for more info.
• Shopify Capital
  You potentially can receive financing that helps approved merchants get the funds they need, without lengthy bank approvals or giving up part of their company.
• Crowdfunding
  If you don’t want to go the traditional funding route, you could always crowdsource funds from a group of people online.
• Personal investors
  Startups also fund their companies through VC or angel investors, or friends and family in the early stages. 

4. Choose a Business Structure

The proper structure is one that strikes a balance between the flexibility provided by several possibilities and the legal and financial protection you require. Before starting your firm, you should carefully evaluate this choice because it is crucial.

Business structures vary based on your country and area, but common types—that may go by different names in your country—are sole proprietorship, limited liability company (LLC) and corporation. 

See our extended state specific guides for Arizona, California, Colorado, Florida, Georgia, Illinois, Maryland, New York, North Carolina, Ohio, Pennsylvania, South Carolina, and Texas.

Sole proprietorship 

A sole proprietorship is great if you’re the only person involved in the business, and is usually the lowest-effort structure to pursue, but it leaves you personally liable for the business and its activities. As a sole proprietor you can hire employees, but you’ll need an employer identification number (EIN) to do so, which means registering your business entity.

Limited liability corporation (LLC)

In the US, a limited liability company (LLC) is a typical form of small business entity. It offers liability protection for the business owner(s), ensuring that you are not held liable in the event that legal claims are made against your company. One or more proprietors can create an LLC.

See our state-specific LLC guides for Arizona LLC, California LLC, Colorado LLC, Florida LLC, Georgia LLC, Illinois LLC, Maryland LLC, New Jersey LLC, New York LLC, North Carolina LLC, Ohio LLC, Pennsylvania LLC, Texas LLC, and Virginia LLC.

Corporation

In a C corporation, the owners of the business are taxed separately from the entity. The corporation is owned by its shareholders, who each possess a small portion of the ownership. Normally, major, international firms like Walmart and Apple benefit from being a C corp. However, tiny enterprises that seek to raise capital by issuing shares can use them.

Legal structure factors

• Where is your business located
  Your country’s laws will outline the different structures you can form and whether or not you need a business licence to get started.
• What kind of business are you starting
  Certain company models or sectors of the economy require particular frameworks. There may be a point when restructuring is necessary so that you can collaborate with new partners. Large companies frequently request incorporation from their partners or suppliers, for instance.
• How many people are involved
  You could be able to choose easier options if you’re a solitary proprietor going it alone. To ensure that everything is set up and divided fairly, you’ll need to take into account more sophisticated options if your business has a partner or multiple shareholders.

5. Get Federal and State Tax ID Numbers

Federal tax ID (EIN)

A federal tax ID, also called an employer identification number, or EIN, is a nine-digit number the IRS assigns to businesses and organizations for tax purposes. Think of it as your business’s Social Security number. 

You’ll need an EIN if

• Your business has any employees other than yourself
• Your business is incorporated
• You have any partners in your business (i.e., it is a multi-member LLC)
• You either purchase an existing business or receive one from inheritance
• You have a retirement plan for self-employed individuals (like a Keogh plan) or solo 401(k) retirement plan
• You want to open a bank account (Not all banks require an EIN, but most do.)
• You file for bankruptcy

Having an EIN will

• Help you when you file taxes
• Protect you legally
• Help protect your personal information
• Help you establish credit

State tax ID

A state tax ID is separate from your EIN. An EIN is assigned by the federal IRS, while a state tax ID is assigned by your state. 

Similar to an EIN, a state tax ID aids your company in adhering to state regulations. However, the rules, laws, and even taxes vary from state to state. In order to determine whether your company needs a state tax ID, you will need to examine the legislation of your specific state.

States have different laws. Your state’s taxation, treasury, or secretary of state offices are ideal places to start. To find out if you need a state tax ID, get in touch with them.

6. Obtain a Business License and Permits 

Look into the local, state, and federal licenses you require to operate legally once you have a handle on how to launch a firm. Before starting your firm, it is wise to seek guidance from a small business attorney.

Your startup is governed by local business laws as well as rules and regulations particular to your sector of company. For instance, a food service company must adhere to particular licensing requirements and legal guidelines when managing the products it sells, as well as legal considerations about its marketing strategies, including trademark and copyright rules.

7. Open a Business Bank Account

To make managing your finances far easier, take the time to open a business bank account and obtain a business credit card. Keeping personal and professional finances separate makes doing your taxes much simpler and can help you automate some of the financial steps to running a business as well. Doing this will be especially helpful if you want to know how to start with no money.

8. Get Business Insurance 

Your small business and personal assets are protected from potential threats by business insurance. Even though your state does not mandate insurance, it is always a good idea to give yourself and your company additional security. Each state has various insurance regulations and requirements.

Common types of business insurance

• Liability insurance
  Liability protection insurance covers your business for any legal actions due to accidents, injuries, or negligence.

• Commercial property insurance
  Will help your business if any property is damaged or destroyed due to fire, storm, or theft. It will help pay to repair or replace property, inventory, and equipment.
• Commercial auto insurance
  will pay for any harm done to or by any cars you use for your company. (Forklifts, moving trucks, delivery trucks, etc.) If one of your vehicles causes an accident, it will cover all related costs, including medical bills, court fees, and property damage..
• Workers’ compensation insurance
  covers any employees’ medical bills and lost income after a work-related injury. Depending on how many employees a company has, the majority of states need that companies carry some form of workers’ compensation insurance.
• Professional liability insurance
  safeguards those who work in service-related fields. They are shielded from liability for carelessness or malpractice (for example, estheticians, hair stylists, bartenders, etc.). Insurance against errors and omissions is another name for it.
• Product liability insurance
  Protects manufacturers, wholesalers, distributors, and retailers. It protects them from liability if a product they make or sell turns out to be unsafe and injures someone.
• Business interruption insurance
  Will cover the operating costs if it has to shut down or move (for example, because of a fire or hurricane). It will cover the cost of relocation, paying employees, and paying rent.
• Cyber liability insurance
  offers protection against liability for companies who experience a data breach. Depending on the insurance, it may also pay for the expenses associated with informing your clients of the data breach as well as the provision of services to clients who become victims of identity theft as a result of the data breach.
• Umbrella insurance
  Gives you extra coverage to help pay for anything that may have exceeded your policy limits on other types of insurance.

Understanding the hazards associated with the industry you work in will help you decide what insurance you might need. A t-shirt printing firm located in North Carolina will have wholly different needs than a dog grooming business in California.

After you’ve found the types of insurance your business needs, shop around. There are a lot of companies offering all kinds of insurance with varied policies. If you find it overwhelming, it’s a good idea to go through a reputable licensed agent. A commercial insurance agent will help you find policies that match the needs of your business and your price point.

9. Select Your Tools and Software

Starting a business requires more work than is physically or mentally possible. Small business owners shouldn’t undervalue the value of good software because it’s one of the finest ways to lessen the labor-intensive aspects of running a company.

Does that list include any routine jobs that don’t need much decision-making? Software is used by entrepreneurs to automate or streamline this type of job. In order to support some of your marketing and sales efforts, you can also install software early. A chunk of marketing will benefit from automation right now, despite the real danger of getting sidetracked by too many technologies.

Software to help you manage

• Accounting
  With numerous options to help you track everything from a meal with your business partner to a big inventory order, accounting software is one of the best ways to start your business off on the right financial foot. 
• Email marketing
  Even before they make their first sale, the majority of firms will profit from setting up welcome and cart abandonment email sequences. Along with your online store, an email list is one of the few things you genuinely own online. It offers a direct channel to your clients that is independent of outside algorithms. With Shopify Email, you can start for nothing and invest early.
• Ads
  Paying for advertisements is a necessary expense, particularly for online advertising, but there is marketing software that may help you streamline the process and get the most out of your advertising budget, regardless of how much you have to spend. While marketing in Shopify can help you shorten the time it takes to develop, test, and track your campaigns, it’s a good idea to become familiar with each platform if you intend to scale your paid advertising.
• Project management
  Even if you work alone, having a central location to organize your workload and keep track of crucial activities will help you stay on schedule. You can keep your finger on the pulse with the aid of programs like Trello and Asana, and connecting programs like Zapier are excellent for connecting and automating your most frequent activities.
• Website or online store
  Select a website builder or e-commerce platform that enables you to perform all the essential duties associated with managing your business with ease. Find a theme that works with your product lines and enables you to accept and manage orders with ease. Site performance, payments and checkout, and omnichannel capabilities are particularly crucial factors for businesses in the commerce sector.

10. Hire Your Team

Now that you know how to start a business, it’s time to dive into building your team with employees that will manage it.

How much effort and expertise will you need to put into starting a small business? You must provide answers to these essential issues because they will influence your launch’s timing and level of investment.

The amount of time you have to devote to the project will determine how much work you can complete on your own. You must include in such expenses if you intend to hire staff members, as well as the time needed to discover and onboard them.

Roles you may want to hire employees for

• Inventory manager: to keep your inventory up to date
• Customer service coordinator: to solve customer problems
• Social media manager: to create buzz and grow your social presence
• Ads specialist: to generate traffic to your website
• Graphic designer: to create assets for your marketing material
• Marketer: to plan and write material for email, website, and other campaigns

11. Market Your Business

Brand your business

Building a brand from scratch is no easy task, but critical to stand out in a sea of competition. A brand is more than just your logo and name, it’s how people perceive you whenever they interact with your small business.

Common elements of branding include:

• Brand logo
  A symbol made up of text and images that identifies your business. An effective logo expresses your values and communicates what you do. Create a logo today with our free logo maker.
• Company colors and fonts
  Your colors, logo, and font play a role in your visual identity. Visuals tie into human emotions and can help reinforce your position and brand experience.
• Voice, tone, and messaging
  A consistent and recognizable voice across all your touch points makes your brand sound more human and helps connect with your audience on a personal level.
• Brand positioning:
  A brand position makes it clear who you serve. It communicates to your target audience why you are the best choice for them and what makes your products different.