Small businesses are the backbone of the economy, and entrepreneurs are coming from various types of industries. Over half a million small businesses are founded every month in the United States, showing that it’s never too late or lofty to take a business idea and start a new business. However, understanding everything you need to know as a startup, from creating a business plan or coming up with a business name to identifying the type of business structure your specific business will be, is highly important.
So, Nav wants to make sure that business owners nationwide have the resources and understanding of what it takes to start a business.
10 Steps to Start a Business
No matter the type of business entity you have, small business owners primarily take the same basic steps to form their own businesses and get started. Here is the step-by-step guide to how to take your business idea and create any kind of business.
- Choose your business name
To have a business, it needs to be identified by its own unique name. This name will be used when you go to get a business bank account, as your site’s domain name, to get an employer identification number, and more. As a sole proprietor, you can also operate under your own name. You don’t have to be completely married to the name because many businesses rebrand themselves after a few years. (Example: Facebook in now “Meta.”) However, it may still be proactive to secure a name through trademarking and owning the intellectual property.
In addition to choosing your business name, you will also need to register it. The U.S. Patent and Trademark Office can help you do an initial search to see if any other business entities share the same name. But, finding an attorney to help you through the process is also a benefit in the long term and can help you avoid infringement.
- Create a business plan
A business plan is broken down into many aspects. This will include the purpose of your business, who the business serves (target market), and the projected goals for months and years to come. Your business model should be represented through this plan no matter what business type you have.
Your business plan should have:
- An executive summary. This is an overview of your entire business plan.
- A business description. This summarizes the purpose of your business, its uniqueness, and what your company does.
- Market research, strategies, and market analysis. This would include the size of your company’s specific market, detailed information on your target market and potential customers, in addition to customer buying patterns.
- Competitor analysis. Requires analyzing and assessing your market’s direct competitors while revealing their strengths and weaknesses.
- A development plan of your products and services. A development plan describes the objectives of the company and how it will achieve them. This will also include start-up costs, targeted milestones, and a projected timeline for achieving certain goals.
- An operations and management plan. This details how your business will operate. It may include whether your business will have a physical location or be an online business, what equipment and materials are needed, the team or staff, and anything else that focuses its attention on procedural practices of getting the business up and running.
- Business financing model, financial information, and planning. Nav understands the importance of financing for small businesses and provides much-needed resources to help secure financing from business credit to small business loans. Identifying your business’s early financial needs, goals, and usage can help you to grow at a consistent rate while protecting your personal assets.
- Determine what business structure your business falls under
The forms of ownership include:
- Sole proprietorship
- Limited liability company (LLC)
- C Corporation
- S Corporation
The legal structure of your business will determine the federal tax you have to pay yearly or quarterly and whether your business will require a board of directors, meeting notes, etc.
- Get your tax ID number
A tax identification number is also known as an EIN or an employer identification number. This is an additional way to identify your business and is like a social security number. Your tax ID number will help you apply for business credit, get a credit card, apply for a business license, and identify your business if you apply for a small business grant or loan.
- Open a business bank account
There are many banking options available for small businesses and it’s important to separate your business’s finances from your personal finances to help during tax season and to protect your personal assets. Once you’ve secured an EIN or tax ID, you can apply for a business bank account under that entity’s name.
- Create a marketing plan
A marketing plan is key for any business that wants to grow and have consistent success. A marketing plan outlines the goals your company wants to achieve, besides how your business will be marketed to achieve said goals. This plan should include:
- Who are your direct competitors?
- What are the company’s goals?
- Actionable steps.
- How do you plan to measure and track results?
- Apply for funding
Starting a business is not cheap and will need additional funding sources to pay for much-needed materials and services your business.
- Get a bookkeeper or accountant
Depending on your type of business and where your business is located, you may have to pay quarterly taxes. A bookkeeper or an accountant can help you to keep track of your finances as you grow your business. They can also help you get the most deductions as a newly established entity.
- Develop your company’s payment processing
To get paid for your services or products, you need to identify how your customers/users will pay you. These options include:
- Debit/Credit Card payments
- Money orders, checks, etc.
It may seem pretty self-explanatory, however, depending on the systems you use can also be a matter of how much you will have to pay to use that service. For example, online business owners pay a percentage to PayPal or ShopPay every time their customers use those services. Also, how your customers pay you can help automate receipts and proof of revenue for your accountant, which helps during tax season.
- Launch your business
Launching your business is the final step in getting started. This means that your website is live, your social media accounts are created, your products or services are fine-tuned to the demand of your customers/users, and you have completed the registration of your business through the government.
Things to Consider Before Starting a Business
When doing business, there are many aspects for your company to be successful. And although there are some obvious things to consider before starting a business, there are also additional factors to ensure your business will do well.
Being eager to start a business can cost a lot of money. Considering your startup costs, which could include inventory, office space, marketing, fulfillment, contractors or staff, or all tax-related expenses, that’ll keep you in good standing with the IRS like an accountant or accounting software.
Building a business creates some liabilities on behalf of the company. Having business insurance may cost upfront, but save you a lot of money in the long run. Types of insurance can include workers’ compensation, liability insurance such as product liability and general liability, hazard insurance, and more.
It’s great to come up with ideas we personally think are great, but creating a successful business structure starts with identifying if there’s a need for what you’re offering. Demand dictates the actual value of your product or service and will therefore determine how successful you can be if your market wants what you have to sell.
How to Start a Business FAQs
Here are some frequently asked questions regarding how to start a business:
Will my business need permits or licenses?
Whether your business will require permits or licensing will depend on the state, city, and county your business intends to operate. Your state may not have requirements, but the city or country your business will operate from might have specific rules. This also includes businesses that fall under the “nonprofit” umbrella, so it’s good to check beforehand.
How do I market my product or service?
There are many ways to market your business’s products and services whether you have an ecommerce or brick-and-mortar business. Building an online presence is a great way to build your customer base and attract new customers. Social media has helped many new businesses gain a reach with and without ads. In addition, your business can use:
- Email marketing
- Word of mouth
- Using search engine optimization (SEO)
Why do I need a business plan?
A business plan helps to identify that your business truly fulfills a need and/or solves a problem. It also helps with projecting the future and growth of your business. And with a business plan, you can secure funding such as venture capital or grants. The business plan can also give you keen insight into who your direct competitors are and what holes in the market you can fill that they aren’t.
How do I finance my business?
There are many funding options for your business including:
- Business Credit Cards
- Small Business Loans
Nav is the best place to start — we can match you with personalized financing options based on your business data. The Small Business Administration (SBA) also offers businesses an assortment of options to get funding besides local resources that are specific to where your business is located.
Starting a business can be an exciting journey and Nav is here to help you with a full-bodied marketplace of resources that’ll get you on your way to a successful business. Find the Best Business Credit Card Options for 2022 here
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