You’ve finally thought of a business idea – congrats!
Maybe you found a problem you want to solve in your industry, and you’re confident you can offer something that other companies don’t. Or, perhaps you’re simply after financial independence, and you think you’ve come up on the million-dollar idea.
That’s okay too! Whatever your reasoning, starting a small business can be challenging, and the best way to tackle the challenge is by being informed.
Luckily, this guide will help you do just that. Follow these eight steps to turn your big idea into a successful small business!
#1 Conduct market research
Now that you’ve come up with a business idea, you want to determine whether it actually has the potential to succeed. So, the first step in creating a business is to research your market.
Determine what the market wants and what problem you’re trying to solve. Are any companies already doing what you want to do, and is there a good reason why or why not? Take the time to make a profile of your target audience, analyzing their relevant interests, demographics, and buying habits.
Then, find out what your audience likes and dislikes, and which other services they’re currently using that are comparable to yours. There are a number of ways to collect this data, whether you’re scouting out the competition or understanding what your target audience wants from you. You may want to try:
– Creating surveys. If you have questions for your audience, ask them! Post a poll on social media, send out a questionnaire to your email list, or add a pop-up survey to your website.
– Conducting interviews. Although time-consuming, this will give you an in-depth look into what your audience feels, thinks, and needs.
–Gathering focus groups, to initially try out your product/service before you offer it to the public and give you honest feedback.
#2 Create a clear business plan
A business plan is a clear blueprint that should guide your company from the start-up phase all the way through establishment and growth. While creating one may seem like a tedious task, it’s a crucial part of a new business’s success (so make sure not to skip this step!)
This is the place to lay down your vision for your small business, and to flesh out the reason you’re starting a business in the first place. How do you see it taking shape, day-to-day? Which specific services or products will you provide, and which materials do you need to make that happen?
When you’re ready to put it on paper, there are two types of business plans you can choose to create: A traditional business plan, or a lean start-up plan.
Traditional plans are detailed, multipage accounts that discuss your market analysis, organizational structure, product, marketing and funding strategies, and more.
A lean start-up plan, on the other hand, can be as simple as a one-page outline of the basics. For simplicity’s sake, you may want to start with the one-pager, but note that if you’re seeking financial support, you’ll need a traditional business plan to cater to investors.
#3 Determine your financial strategy
Perhaps the most daunting part of starting a small business is figuring out how to fund it.
Before you do that, though, you need to evaluate what your business needs are, and how much those cost.
Start with putting your existing and projected finances on paper in a clear and organized way; i.e. create a spreadsheet. Your spreadsheet should include the initial costs of starting your business, like:
– Licenses and permits
– Legal fees
– Cost of equipment
Then, determine the ongoing costs of operation. Make sure to include:
– Projected marketing costs
– Employee salaries
Once you know exactly what you’ll need to pay for, consider how to fund it. Will your business be making revenue from day one? If yes, that’s wonderful; for most small businesses, however, that’s not the case. Instead, you’ll have to explore other means of financing.
There are tons of funding options available, including small business loans and grants, crowdfunding, angel investors, bootstrapping, and more. Determine which combination of funding options works best to cover the finances on your spreadsheet.
#4 Pick a location
This requires more deliberation than you might think. If you’re a brick-and-mortar store, make sure your business is accessible, easy to find, and located near your target demographic. Also, consider whether the stores nearby could help or hurt your business.
Regardless of your industry, you’ll want to think about the cost of utilities, options for short versus long-term rent, and whether that space will support your equipment and desired number of employees.
Of course, if you’re starting an online business, this stage is going to look a little different than if you’d need a physical storefront. That said, you still have some decisions to make: Where to host your website? Do you need a simple landing page, or a multi-layered site with a full range of ecommerce capabilities?
Note that the decisions you make here will depend on your budget, and should factor into the financial strategy you laid out in the previous step.
#5 Dot your legal I’s
The legal process of starting a business might seem discouraging, but creating an organized checklist makes it easy and straightforward. Your checklist should include:
– Business structure – Weigh the pros and cons of creating an LLC, a corporation, partnership, or something else.
– Registration- Determine your company’s name, and register it with your federal (and, in some cases, state) government to protect your brand.
– Tax IDs- Use your employer identification number (EIN) to get a federal, and possibly state, tax ID.
– Licenses and permits- Stay legally compliant by applying for the licenses and permits required by your industry and location.
Note that the steps you need to take in this stage will largely vary depending on your industry and business structure. For example, if you’re looking to start a construction company, you will likely have much more red tape to wade through than if you’re opening an online store.
To make sure you’ve covered all your bases, it’s best to consult with a lawyer rather than attempt the legal process on your own.
#6 Choose an accounting system
You’ll need to create a bank account specifically for your business, but that’s not all. You’ll also need an accounting system to manage your budget, make and obtain payments, and file taxes.
Consider hiring an accountant in-house or on a freelance basis. Alternatively, you can manage your company’s finances on your own by choosing a small business accounting software that is best suited for your needs.
#7 Build your team
You might want to be a solopreneur, and that’s okay. But if you want to build a team, there are a few things to keep in mind.
First, make sure you can clearly articulate your company’s mission and goals to potential employees. Part of bringing quality people on board is understanding yourself what it is you want your business to achieve, and subsequently finding a team that will help contribute to that achievement. As such, you’ll want your employees to believe in your mission and commit to those goals.
Also, be sure to develop a clear sense of the culture you want your company to have. As exciting as it may be to make your first hire, there’s no need to rush and hire the first candidate that applies; instead, aim to bring on employees who you believe will fit well within the desired office dynamic.
Finally, establish a clear set of hiring protocols, such as determining which interview questions are the “right” ones to ask and obtaining the necessary forms. Like most parts of managing a business, recruitment is a skill, and you’ll learn what’s important to focus on as you go along.
#8 Develop a brand and marketing strategy
Once you have your small business set up, it’s time to establish your company as an authority in the industry you’re in. To do that, you need to build brand awareness.
The first step is to create a brand identity, one that gives your business an image and reflects the feelings you want people to have about your company. Do you want to appear classic and serious, friendly and fun, or somewhere in between? Think back to the market research you did and try to come up with a brand personality that will resonate with your audience.
Then, you’ll need to design a business logo that reflects this personality, choosing colors and fonts that contribute to the image that you’re trying to build. You should also determine a brand voice, or a specific tone through which you will communicate with your audience. Together, these elements will help to shape your audience’s perception of your brand.
Next, you’ll want to create a website (if you don’t already have one), and set up business pages on social media channels like Facebook, LinkedIn, and Instagram.
These platforms will both give your customers a place to interact with your brand and help you to grow a bigger audience as word gets out about your business.
Eventually, you will need to create content your audience finds engaging, whether through blog posts or weekly updates to your social pages. Regardless of where or how you post, make sure to stay consistent with your brand colors, logo, and brand voice on each platform (and any other place your brand will make an appearance).
By spreading awareness of your brand and making it desirable to your target audience, you’ll be able to gain loyal customers and scale your business.
Over to you
Starting a small business may feel daunting, and it certainly takes a leap of courage. There’s no way around it: You’re going to make mistakes along the way.
However, if you outline a plan and strategize beforehand, the mistakes will only help you to grow and your business to thrive. Make sure to stay up-to-date on your industry, constantly listen to your audience, and always brand consistently.
Are you worried about not having enough hours in the day to bring your business to life? Check out this blog post on productivity hacks and learn how to make better use of your time!