15 Steps to Starting a Business
Starting a business can be both exhilarating and challenging. It requires your full attention and energy. It all begins with an idea, an observation that there is a problem and the belief that you have a new solution – or a better one.
Research is crucial. So much can be learned and extrapolated from just a few hours of Googling and surfing the Internet. “Do your homework” thoroughly and you’ll be so much better off. In fact, it’s a necessary first step to determine the viability of your business idea.
It’s important to be honest with yourself. If it seems your idea has already been done, can you do it better or offer it cheaper than the competition? Ask yourself the hard questions and get feedback from associates and mentors.
Better yet, test your idea with a simple landing page that describes your product or service. See if people will give you their email address to be notified when your product or service launches. Then, let the facts and numbers speak for themselves and don’t let emotions cloud the truth.
Some of us may cringe at the thought of it, but anyone who is serious about their startup must write a business plan. Here’s the good news: You can do it and it can even be rewarding!
First things first. Get your ideas written out. Don’t worry about brilliant prose. Just make notes on your product or service. Describe the product; how you’re planning to market and sell it; what is your pricing model; who is your competition; and what is your expertise.
“Take the time to write a formal business plan for financing. This focuses you into critical thinking on all aspects of your business, including financial projections, sales and operations. Even if you are not currently seeking financing, you need to get prepared, strategically and financially, for that possibility.”
Knowing your product really means 2 things:
Firstly, what is it made of? That is, you need to know what are the ingredients or components in detail. Even a service is made up of something. If you are starting a Plumbing service then you need to describe what parts you have for inventory; do you need a truck; what tools need to be purchased etc.
Secondly, what are the features and what are the benefits? There’s a difference and you need to understand the distinction. If you are selling low-fat cookies the feature may be: ‘we use an alternative sweetener’ but the benefit is ‘our cookies are healthier for you’.
Understand everything there is to know about your service as it relates to your target audience. How do you deliver it? Is your price competitive? How is it packaged? What makes your product unique?
Only after thoroughly going through this exercise can you properly price your product or service; understand who your customer is; and how you can communicate with your target audience.
In your research phase you should be able to determine how people in your niche seem to be doing their marketing. This will give you ideas for how you might like to do your own marketing. Is it going to be Google Adwords; Facebook marketing; will you rely on word-of-mouth referrals or something completely different?
List bullet points describing who your ideal clients would be and also a set of points explaining how you will let them know about your business. Next, explain how you’ll create leads and ultimately sales from your target demographics. After you’ve done this, the Marketing Plan (which is actually a section in the business plan) should flow more easily.
If possible, it’s even better to do some real testing of both Facebook and Google ads (or whatever marketing channel you see fit). You can send the traffic to a simple landing page and see if people enter their email in exchange for more information. Then you’ll have a much more accurate idea of how much it will cost per lead.
Can’t I just start selling my product? Maybe. Do I really need Financial Projections? The short answer is yes. If you plan to raise funds they need to be more detailed. If you are bootstrapping the startup yourself or with a partner you might be able to get away with a simpler set of Projections.
Think about it: How can you know whether you’re charging enough and when are you going to be profitable unless you put down some numbers?
The name of your business is obviously very important. Also consider whether the .COM domain name is available. We recommend GoDaddy.
Some tips for choosing a name include:
We always strongly suggest to our members that they incorporate their startup. It should help to protect you and your personal assets from potential liabilities from lawsuits. It is worth the modest investment of a few hundred dollars.
There are 3 basic choices you have to choose from when incorporating: S Corp; LLC; and C Corp. The right legal structure for you depends on issues related to taxes and liabilities.
Fundraising starts with 2 simple questions: How much do you need? How much equity are you willing to sell? This takes us back to Steps 2 & 5: your Business Plan and Financial Projections.
If you project losses in the first year of $45,000 you may want to raise $60,000 – $75,000. Now much of your business is that worth? Truth be told, there is no magic formula to determine this. The answer always lies somewhere in between what the investors feels is fair in return for their money and what percentage of your company you feel is fair to offer for their money?
It is vital that you manage your accounting properly. However, it is not necessary to spend a fortune doing it. You can combine an affordable payroll service with a part-time bookkeeper and you’re set.
Now you’re ready to spend your time where it needs to be – growing the business and caring for your customers.
Insurance always seems like a waste of money – until you are faced with a theft, or fire, or lawsuit etc. Then you may wish you were covered.
For most businesses, insurance coverage is a must for survival. Take a reality check, ask yourself what would happen if:
Do you really need an office to start out or can you save the money and work from home? When starting a business it’s always good to be practical but also save money wherever possible. If you do decide get an office space there are several things to consider:
A professional and aesthetically pleasing website lets everyone know you mean business. It is the virtual business card or storefront for all your products and services. It gives you the chance to reach millions of people all over the country or even world.
These days it’s possible to create a top-notch website affordably without ever touching code. Vendors such as Weebly, ThemeForest and Shopify all offer great solutions that any new business should be satisfied with.
Remember, just creating your website won’t drive customers to your door. You’ll also need a good domain name, great content and corresponding marketing strategy to attract quality traffic and to then turn them into leads and buyers.
Thanks to the Internet it’s now possible to advertise your business affordably and measure the return on investment with every cent spent. The two most obvious places to start are with Google Adwords and Facebook advertising. Then there are countless other channels to explore such as:
Google offers an amazing free tool called Google Analytics which tracks everything that happens on your website. If setup correctly you can know exactly how much each lead for your service or sale of your product costs per marketing channel. They say that “knowledge is power” and this couldn’t be more true with marketing your business.
Few can argue that without sales you don’t have a business. It’s the lifeblood of your business and it’s importance can’t be emphasized enough. Sales requires confidence and this achieved by knowing your product or service like the back of your hand.
Another important part of successful sales is to focus on benefits rather than features. Apple is famous for this. For example, with their iPod launch they labeled it as “1,000 songs in your pocket” rather than, “It has a 5GB hard drive”.
The advantages of using the “cloud” for your startup business are amazing. It allows you to make use of highly sophisticated infrastructure, software and apps all for free or very affordable rates. What’s more: it’s accessible from anywhere with the Internet.
For startups, it means that we live in a time where you can outsource many time-consuming processes. For example, document collaboration, payroll, file sharing, data storage and CRM to name just a few. This makes it possible for you to stay focussed on what’s most important – your customers.
It’s a fine balance, though. Even if you’re sure you can succeed, sometimes it helps to get a reality check. You don’t want to be acting from a self-created bubble. Talk to knowledgeable friends and family about your idea or ask a local business owner you respect to be your mentor.
A fresh and objective pair of eyes can help you pinpoint any weaknesses in your idea or identify potential pitfalls.
One factor in your decision is your working style. Can you work alone or do you need other people to kick ideas around or share the burden? You may have gaps in your skills or experience that a partner could bring to the venture. Maybe you have great technical skills, but little business experience. A partner could provide vital balance to your new business.
Starting a new business can be an adventure … hang on and enjoy the ride
Step 1: Be sure to do your research (thoroughly)!
Research is crucial. So much can be learned and extrapolated from just a few hours of Googling and surfing the Internet. “Do your homework” thoroughly and you’ll be so much better off. In fact, it’s a necessary first step to determine the viability of your business idea.
It’s important to be honest with yourself. If it seems your idea has already been done, can you do it better or offer it cheaper than the competition? Ask yourself the hard questions and get feedback from associates and mentors.
Better yet, test your idea with a simple landing page that describes your product or service. See if people will give you their email address to be notified when your product or service launches. Then, let the facts and numbers speak for themselves and don’t let emotions cloud the truth.
“Research your market, your competition, your ideal target market and validate your main value proposition. Getting fast and real feedback will save a lot of time, money and will allow you to make changes to your product quickly. Most new entrepreneurs spend a lot of time trying to build a business just because “they” think is a great idea.”
Step 2: Write a killer business plan
Some of us may cringe at the thought of it, but anyone who is serious about their startup must write a business plan. Here’s the good news: You can do it and it can even be rewarding!
First things first. Get your ideas written out. Don’t worry about brilliant prose. Just make notes on your product or service. Describe the product; how you’re planning to market and sell it; what is your pricing model; who is your competition; and what is your expertise.
“Take the time to write a formal business plan for financing. This focuses you into critical thinking on all aspects of your business, including financial projections, sales and operations. Even if you are not currently seeking financing, you need to get prepared, strategically and financially, for that possibility.”
Step 3: Intimately know your product or service
Knowing your product really means 2 things:
Secondly, what are the features and what are the benefits? There’s a difference and you need to understand the distinction. If you are selling low-fat cookies the feature may be: ‘we use an alternative sweetener’ but the benefit is ‘our cookies are healthier for you’.
Understand everything there is to know about your service as it relates to your target audience. How do you deliver it? Is your price competitive? How is it packaged? What makes your product unique?
Only after thoroughly going through this exercise can you properly price your product or service; understand who your customer is; and how you can communicate with your target audience.
Step 4: Write your marketing plan based on your research
In your research phase you should be able to determine how people in your niche seem to be doing their marketing. This will give you ideas for how you might like to do your own marketing. Is it going to be Google Adwords; Facebook marketing; will you rely on word-of-mouth referrals or something completely different?
List bullet points describing who your ideal clients would be and also a set of points explaining how you will let them know about your business. Next, explain how you’ll create leads and ultimately sales from your target demographics. After you’ve done this, the Marketing Plan (which is actually a section in the business plan) should flow more easily.
If possible, it’s even better to do some real testing of both Facebook and Google ads (or whatever marketing channel you see fit). You can send the traffic to a simple landing page and see if people enter their email in exchange for more information. Then you’ll have a much more accurate idea of how much it will cost per lead.
“First, develop your Ideal Customer Profile and research their Desired Outcome (Required Outcome + Appropriate Experience); don’t try to be all things to everyone. This’ll allow you to acquire customers that rapidly get value from what you sell, stay with you longer, buy more over time, and tell their friends.”
Step 5: Do your financial projections – breathe … breathe
Can’t I just start selling my product? Maybe. Do I really need Financial Projections? The short answer is yes. If you plan to raise funds they need to be more detailed. If you are bootstrapping the startup yourself or with a partner you might be able to get away with a simpler set of Projections.
Think about it: How can you know whether you’re charging enough and when are you going to be profitable unless you put down some numbers?
“Always put finances first. Get a handle on all important financial documents before even starting. Offer a barter with a bookkeeper or an accountant so you make sure you have someone watching your finances from day one. Too often, startups waste money by not tracking spending and thinking wisely about financial investments. Don’t let yourself start a business cash poor because of your inability to make the “not so fun stuff” a priority.”
Step 6: Come up with your business name and brand strategy
The name of your business is obviously very important. Also consider whether the .COM domain name is available. We recommend GoDaddy.
Some tips for choosing a name include:
- Using your own name in the business name e.g. John’s Delicatessen
- Finding an attribute of the business to create a positive response in the audience – Precision Marketing or Green Logistics, for example.
- Helping prospects remember the website address by choosing a short name that is recognizable, easy to remember and meaningful.
- Once you’ve got your business name selected and your domain name secured it’s time to work on your branding strategy. Brand is all about building credibility with your target audience. It takes time and is important for you to be consistent across the board with your messaging. Your logo is the fun part of branding but don’t spend too much time and money on it at first. You could use a local designer or a website like 99designs to create a professional logo affordably.
“Spend the time to define the foundational elements of your brand, including your brand mood & personality, exactly what you’re brand is all about, and who your perfect reader/client is before you try creating a unique brand identity. Branding really boils down to knowing exactly who you are. A killer signature style + consistency = brand recognition and online visibility. It’s all about setting yourself up for success, baby!”
Step 7: Decide on which legal structure is right for you
There are 3 basic choices you have to choose from when incorporating: S Corp; LLC; and C Corp. The right legal structure for you depends on issues related to taxes and liabilities.
Step 8: Start fundraising for your business
Fundraising starts with 2 simple questions: How much do you need? How much equity are you willing to sell? This takes us back to Steps 2 & 5: your Business Plan and Financial Projections.
If you project losses in the first year of $45,000 you may want to raise $60,000 – $75,000. Now much of your business is that worth? Truth be told, there is no magic formula to determine this. The answer always lies somewhere in between what the investors feels is fair in return for their money and what percentage of your company you feel is fair to offer for their money?
“When funding your new or growing business, don’t invest or raise money until you’re sure what your profit model will be and how your product will generate revenue. If possible, try not to rely too much on outside funding. Bootstrapping is usually more effective in the long run, because you retain complete control and you always know where your revenue stream is coming from and how long it will last.”
Step 9: Set up your accounting system for under $10/ month
Now you’re ready to spend your time where it needs to be – growing the business and caring for your customers.
“If you’re going to set up an accounting system for the first time then cough up a few bucks and involve a CPA. He or she will advise you on the necessary accounts. This way you can be sure that it’s done the right way and the system will grow with your company. Remember – do what you do best and bring in experts to do what they do best.”
Step 10: Make sure you’ve got business insurance
Insurance always seems like a waste of money – until you are faced with a theft, or fire, or lawsuit etc. Then you may wish you were covered.
For most businesses, insurance coverage is a must for survival. Take a reality check, ask yourself what would happen if:
- An employee or visitor falls in your office.
- A customer takes an action based on advice on your website and it all goes wrong.
- There’s a fire and your equipment is damaged.
- A customer is injured as a result of a faulty product.
Step 11: Set up an office or work space affordably
Do you really need an office to start out or can you save the money and work from home? When starting a business it’s always good to be practical but also save money wherever possible. If you do decide get an office space there are several things to consider:
- Furniture – It’s usually possible to find quality used furniture from your local thrift shop but these days Amazon offers good quality options for very affordable rates. To start with you office can be very simple with a desk, chair or two and a filing cabinet.
- Communications – Getting a reliable landline phone and the highest speed Internet connection is a must. These days it’s also essential to have good quality smartphone for Internet, email and useful apps so that you can work from anywhere while traveling etc.
- Technology – Prior to investing in a new computer, decide how you’ll use it. Will you only be working from your office or will you need to meet clients in a coffee shop? A desktop computer is better because of the big screen and more powerful processor while a laptop or tablet enables you to be more mobile. An affordable laser jet printer is a necessity and it’ll rarely need new over-priced ink cartridges.
“Never let the business become more important than your health. Have set work hours. Get yourself in a schedule that you can live with (emphasis on the “live). The number one mistake I see new entrepreneurs make is that they sacrifice their lives and their health for this thing they’re trying to create. Be smarter than that.”
Step 12: Make a beautiful & professional website without breaking your piggy bank
A professional and aesthetically pleasing website lets everyone know you mean business. It is the virtual business card or storefront for all your products and services. It gives you the chance to reach millions of people all over the country or even world.
These days it’s possible to create a top-notch website affordably without ever touching code. Vendors such as Weebly, ThemeForest and Shopify all offer great solutions that any new business should be satisfied with.
Remember, just creating your website won’t drive customers to your door. You’ll also need a good domain name, great content and corresponding marketing strategy to attract quality traffic and to then turn them into leads and buyers.
“When it comes to blogging, don’t choose quantity over quality. It’s better to start with one amazing blog post per week and promote it like crazy than five mediocre ones.”
Step 13: Market your business and measure your results
Thanks to the Internet it’s now possible to advertise your business affordably and measure the return on investment with every cent spent. The two most obvious places to start are with Google Adwords and Facebook advertising. Then there are countless other channels to explore such as:
- Search Engine Optimization
- Social Media marketing
- Content marketing
- Email marketing
- Mobile marketing
- Local marketing
Google offers an amazing free tool called Google Analytics which tracks everything that happens on your website. If setup correctly you can know exactly how much each lead for your service or sale of your product costs per marketing channel. They say that “knowledge is power” and this couldn’t be more true with marketing your business.
“Before launching a blog, I put thought into the execution. Having passion is all well & good but there’s got to be some sort of method to the madness!”
Step 14: Start selling like there’s no tomorrow
Few can argue that without sales you don’t have a business. It’s the lifeblood of your business and it’s importance can’t be emphasized enough. Sales requires confidence and this achieved by knowing your product or service like the back of your hand.
Another important part of successful sales is to focus on benefits rather than features. Apple is famous for this. For example, with their iPod launch they labeled it as “1,000 songs in your pocket” rather than, “It has a 5GB hard drive”.
“Drop the “touching base” and “checking in” mentality from your vocabulary entirely. When making follow up calls, become an asset in their decision process. That’s when they’ll really want to work with you!”
Step 15: Be sure to set up (free) business cloud services
The advantages of using the “cloud” for your startup business are amazing. It allows you to make use of highly sophisticated infrastructure, software and apps all for free or very affordable rates. What’s more: it’s accessible from anywhere with the Internet.
For startups, it means that we live in a time where you can outsource many time-consuming processes. For example, document collaboration, payroll, file sharing, data storage and CRM to name just a few. This makes it possible for you to stay focussed on what’s most important – your customers.
“I have met many entrepreneurs who fall into the success trap. Once they start making real money, that’s the most important thing to them. Don’t let money or success change you; neither will give you peace or make you happy.”
Before starting your business also consider these additional points below
What is a small business?
By definition, a small business can range in size from one person working from their basement to a company of 50-100 people. Since you’re reading this, you’re probably on the smaller end of the scale, or maybe still brainstorming startup ideas.How big should you aim for at first?
Technology, as we’ll explain later, gives you the ability from day one to perform at a level that once was only possible for much larger companies. But, as a starting point, you could gain more by focusing on a narrow niche market where you have special knowledge or skills. Niche markets are less attractive to larger companies, so you’ll face less competition as you grow revenue and hone your business skills.Passion & Expertise are crucial
Passion for what you are going to do every day is of the highest importance. It gives you the energy to hit the ground running. But it’s no use without expertise – a critical second ingredient.Believe in yourself
Expertise and passion together make a powerful combination, giving you the confidence in the strength of your idea and your abilities.It’s a fine balance, though. Even if you’re sure you can succeed, sometimes it helps to get a reality check. You don’t want to be acting from a self-created bubble. Talk to knowledgeable friends and family about your idea or ask a local business owner you respect to be your mentor.
A fresh and objective pair of eyes can help you pinpoint any weaknesses in your idea or identify potential pitfalls.
And Remember: Equity is a precious commodity
One final element to consider at the outset is your equity or ownership in the business. You will have to put a lot into the venture – your time, skills, expertise, passion and your money. Will you attempt to fully retain that equity or should you bring in others to share the equity?One factor in your decision is your working style. Can you work alone or do you need other people to kick ideas around or share the burden? You may have gaps in your skills or experience that a partner could bring to the venture. Maybe you have great technical skills, but little business experience. A partner could provide vital balance to your new business.