The most daunting part of any new business is the start. You might have an idea you believe in, and it might be a good one. However, it’s not going anywhere if you don’t know how to turn that idea into reality. The following steps will help you take your idea from dream to reality when starting a business.
Come up with an idea
The first step to starting a successful business is developing a good idea. You may have an excellent plan, but if your idea isn’t unique and your product isn’t different or original enough, you’ll have little chance of making it big.
To come up with the right idea, think creatively. What could you do better than other people in the same field? Then use your skills and talents to make that happen!
Write a business plan
Writing a business plan is the most important step in starting a business. It’s your blueprint for success and will help you understand what you need to do to achieve your goals. A good business plan also enables you to gain credibility with investors and lenders as you seek financing for your company.
The components of a good plan include:
Mission statement: What is the purpose of this business? Where are they going? This should be clear, concise, and compelling. It must reflect your company’s personality and its products or services. But don’t be so specific that it can’t adapt when circumstances change over time.
Goals: What are five-year financial goals? What tactical steps (key performance indicators) are necessary to reach those goals within three years? A good rule of thumb is that if there isn’t a way to measure something as important as revenue growth or profit margin by quarter or month across multiple years, then it isn’t worth putting in writing because there’s no way for anyone else to hold yourself accountable for achieving those targets over time.
Fund your business
If you’re considering starting a business, you should ask yourself: “Do I have enough money to get started?”
This may seem obvious, but it’s important to remember that cost is often an overlooked or misunderstood aspect of any new venture. Even if your startup idea seems simple on paper, there will be unexpected expenses, which won’t always be easy to predict. For example, if you decide to build software for mobile devices and plan on developing it in-house instead of hiring an outside team (which is likely), then you need money for things like laptops and office space. According to the Small Business Administration (SBA), most businesses fail within their first year because they don’t have enough cash flow during this critical period.
If starting a business sounds like something worth pursuing but isn’t sure how much money would be involved in doing so — don’t worry! There are many ways for entrepreneurs who don’t have much capital yet still want their own companies built up over time instead of giving up altogether due to lack thereof.
Pick your business location
Location can be a significant factor in your company’s success. If you’ve spent time researching the business industry and have identified which niche to target, your location must meet the needs of that business.
Here are some things to consider when picking a location for your business:
- Customers: Where do most people who purchase what you’re selling live?
- Employees: Are there enough people living nearby who are qualified for the jobs at your business?
- Suppliers: Do those companies offer goods and services that match what you sell?
- Competitors: Are there competitors nearby offering similar products or services as yours, and if so, how would this affect the market share of both companies’ offerings (e.g., by creating competition)?
Choose a business structure
Sole proprietorships are the simplest business structure; you can use them if you’re a single-owner company.
Partnerships have two or more people who divide duties and share profits. They must file an annual information return (IRS Form 1065) for each year that ends on December 31.
Corporations are legal entities owned by shareholders who elect a board of directors to oversee daily operations. Corporations must file an annual report with the state in which they do business (called an “annual franchise tax return,” or IRS Form 1120), as well as federal quarterly tax returns (IRS Schedules C, EZ, K, and SE). The first step in creating a corporation requires filing basic paperwork with your state government office. It is usually called either “incorporation” or “articles of incorporation.” Once this is done, you’ll need to get a separate license from your local government to operate your business under that structure; this may require paying an additional fee every year as well as completing additional forms.
Choose your business name
Name your business carefully. Choose a name that’s easy to spell and pronounce, preferably one that’s two words or less. Don’t be too short or long; ideally, it should be between three and seven syllables. Finally, ensure your new company’s moniker is unique enough not to confuse other businesses in the same industry—or even people who share names with you.
When choosing a name for your company (or product), avoid using punctuation marks or adding ‘s’ after nouns. This can make it difficult for customers to find you online due to search engine limitations on keywords containing special characters such as quotation marks!
Register your business
The next step is registering your business with the state where you’ll be doing business. If you’re planning on operating out of a home-based office, you’ll also need to register with your city and county.
If you’re starting an online business or selling products that aren’t physical (like eBooks), then it’s unnecessary to register with any government agencies. However, if your business will involve selling physical items or conducting face-to-face interactions with customers, then it’s important for both legal and marketing reasons that you register as soon as possible so that customers can see that there’s no question about who owns their money when they buy from you!
Get federal and state tax IDs
Get Federal and State Tax IDs. If you plan to hire employees, you’ll need an Employer Identification Number (EIN), different from your Social Security Number (SSN). The IRS website explains that the EIN doesn’t replace your SSN; it just acts as a business identifier. You can obtain an EIN by filling out Form SS-4 and mailing it in or applying online through the IRS website.
Get an S-TIN number. If you decide to hire employees, you’ll also need to find out if they’ll be working with clients in any state other than where they live or work (e.g., Illinois). This will determine whether they’re required by law to have one of three types of identification numbers: A federal tax identification number called a SID; an SBIR/CBI grant applicant ID number from the U.S Department of Commerce; or a sales tax permit from the state’s Department of Revenue.
Apply for licenses and permits.
Before you can open for business, you’ll need to apply for licenses and permits. Licenses are used in healthcare, education, or finance to verify that your business meets government standards. Permits are required when your business operates within a specific area (such as selling alcohol on the beach) and allows you to comply with local laws. Different types of licenses are available depending on your industry:
This license is required by federal, state, and local governments before construction begins on any project that uses land they own (such as a new road or building). It’s also necessary if you want to sell alcohol at a public event such as a carnival or concert.
Health department license
Your health department issues this license after an inspection. Of course, if they confirm that all food preparation areas meet their standards for cleanliness and sanitation. This includes refrigerators, freezers, sinks, dishwashers, and heating/cooling equipment used for cooking purposes only (not serving customers). Once approved by an inspector during one visit every six months after that, unless something changes drastically enough, it warrants another inspection sooner than usual. Otherwise, no further action is needed until the next inspection date arrives again later next year when the renewal due date comes around again.
Open a business bank account
Choose a bank that will be a good fit for your business. Finding the right bank is essential to the success of your business. Not only because it can provide you with the services and products you need but also because doing so will help establish trust for potential clients and customers.
Choose a bank that offers the services you need. If any specific features or products are important to you, determine whether your chosen institution provides them before signing on.
Choose a bank with a good reputation. This doesn’t mean just looking at customer reviews; instead, looking at how long they’ve been in business and their financial performance over time (i.e., profits).
You should also consider whether their customer support is helpful when needed—and if online resources are available before signing up!
Set up business accounting
Setting up your accounting is the first step.
Understand what double-entry accounting is and how it works. It’s a system that requires every transaction your business makes to have two sides—a debit side and a credit side. This means that when you spend money on supplies, that expense shows up as a negative number in one column of your ledger (the debit column). But there’s also an offsetting positive entry (the credit side). It records where that money came from: perhaps you sold goods or services at a profit or received payment for services rendered by someone else.
Create ledgers for your business accounts such as cash, accounts receivable, inventory, fixed assets including equipment and real estate owned by the company, and accounts payable such as bills owed to vendors who provided goods or services on credit terms to the company during its fiscal year ending.
Obtain necessary insurance
As a business owner, you must have insurance. You will need to obtain various types of insurance. This includes business insurance, equipment and building protection insurance, workers’ compensation coverage, and other forms of property loss protection. You may also be required to carry cybercrime policies or coverage for your employees if you work with sensitive information regularly.
When deciding on the types of coverage appropriate for your situation, read through each policy carefully, so there are no surprises when something happens. You need help from an insurer immediately.
It’s essential not only to find an affordable plan. But one that also fits into your budget during good times and bad ones (like when something goes wrong).
Define your brand
Branding is the process of creating a unique identity for your business that helps you differentiate yourself from the competition. It’s about more than just a logo. Branding is about expressing your business values and conveying those values to consumers in relevant ways. For example, if you’re starting a yoga studio, consider how you’ll communicate the importance of mindfulness and self-care throughout all operations. From hiring employees who embody these qualities to offering classes on meditation techniques or herbal remedies for stress relief.
A strong brand will set you apart from competitors in significant and subtle ways. A great way to start thinking about this is through customer service. If someone feels like they were treated well at one store but poorly at another nearby establishment with similar products/services (or vice versa), chances are they’ll choose where they feel most cared for next time they need something similar. And word will spread quickly!
Starting a business is an exciting and challenging experience. Starting a new business can be overwhelming, but it doesn’t have to be. By following the steps outlined above, you’ll give yourself the best chance at success. While this article doesn’t cover every step in detail (for example, we don’t go into great depth on choosing locations), it does provide basic information on each step so that you know what to expect when launching your company.