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Starting a new business? Find out where to begin and how to start a business as an entrepreneur. Check out this step-by-step guide to help turn your big idea into a successful business.
Starting a new business involves research, planning, fundraising, and various legal formalities. Here is a step-by-step guide for aspiring entrepreneurs.
How to start a business?
Launching a new business is an important milestone and one of the most exciting phases in life. But where to start and what are the preparations? To help you figure out the process and learn the fundamentals, we have compiled a 9-step comprehensive guide to start a business.
From initial planning and paperwork to funding and marketing your business, this guide covers all that you need to know before launching your own business.
1. Develop your business idea
It all usually begins with an idea. If you already have a specific business idea, the first step is to develop a business plan and get more clarity.
When you think of a new business idea, it would be something that you love to do. But you also need to check whether you have the expertise to manage the business and whether it is likely to get profitable.
If you don’t have a clear business idea, try to answer questions like – What do you love the most? What are you good at? Do you have a unique solution to a common problem? Do you have a unique skill that you can monetize? Is there a dream you always wanted to pursue but never got a chance to? Answering these questions can help you arrive at a business concept that is suitable for you. You can even consider a startup business from home if you prefer.
Still, confused about what type of business to start? Have a look at these top startup business ideas:
- Start a Dropshipping business
- Start a Franchise Business
- Start a Virtual Coaching business
- Start a Business consulting firm
- Start a Digital Marketing business
- Start a Cleaning Service
- Start a Local Delivery Service
- Start Selling Handmade products
- Start a Home-made food business
- Start a Pet grooming and care business
- Start a Home Decor business
2. Conduct market & competitor research
Once you have your business idea in place, now it is time to start researching more about the market and your competitors. You should know whether there are other businesses offering the same service or product. If yes, then are those businesses successful?
This market analysis will help you understand the demand for your product or service in the area.
Market research methods
The research process can be completed in three stages as below:
The primary research involves collecting data from customers directly through interviews, surveys and questionnaires. This helps you to learn more about consumer interests and demands in your service location.
When you conduct primary research, try to interact more with people outside your contact list because known people may always give you a biased opinion.
Some examples of primary research are:
- Interviews (face-to-face or telephonic)
- Focus group interviews
- Field visits
The second stage is secondary research where you collect other valuable information published by the government, media, trading associations, etc. You can collect relevant data from newspapers, magazines, trade journals, newsletters, etc and analyse these to understand your industry better.
Secondary research is more beneficial for small businesses as it is more affordable and less time-consuming.
SWOT analysis for business
The term SWOT stands for strengths, weaknesses, opportunities, and threats. SWOT analysis is conducted to examine the internal and external factors that can affect your business.
It is a detailed analysis of the strengths and weaknesses of your business which helps to figure out how your business will perform and what can be improved.
SWOT analysis helps you make informed and data-driven decisions while setting up your business.
3. Create a business plan
Every entrepreneur and new venture needs to develop a business plan. But what is a business plan format? Let’s find out.
A business plan is a document that explains the key aspects of your business, starting from an executive summary to financial goals. It depicts a future road map for your business, explaining how your business will progress in the next few years and achieve the organisational goals. The business plan has to be shared with potential investors, funding firms, and business partners.
According to a report by Harvard Business Review, the most successful entrepreneurs were those that wrote their business plan between 6-12 months after deciding to start a business. Writing a plan in this timeframe increased the probability of venture viability success by 8%. We found that the optimal time to spend on the plan was three months. This increased the chances of creating a viable venture by 12%.
Here is an overview of what to write in a business plan for startup:
- Title Page:- This is the first part of a business plan where you should include your business name, your name and contact details.
- Table of Contents:- Gives the readers a quick overview of what’s included in the business plan.
- Executive Summary:- This includes a brief summary of what your business is about, the goals and future plans. It should talk about the company’s mission, the industry you are operating in, the USPs, the team, the financial capital required, etc.
- Business Description:- A detailed overview of the business venture and what it entails. This section outlines the business objectives and how you will achieve them. If you are selling a product, include its details. In this section, you can also add other details like the company location and number of employees.
- Management Summary:- Give a brief summary of your team and management personnel in this section. Write about their expertise and how they help the company meet its business goals. Highlight the key strengths and abilities of your team so that potential investors can evaluate it.
- Marketing Strategy:- This part describes the company’s marketing strategy and plans. It talks about how the company will reach the target audience and the marketing channels.
- Competitor Analysis:- Here you will list out details of your market competitors and rivals. Analyse their strengths and weaknesses and how your business differs from the competitors.
- Business Operations:- This is where you talk about your day-to-day business operations. How does your business operate on a daily basis? What are the strategies you implement for the process? How does the manufacturing and distribution process work? You can depict the details using diagrams, graphs and flowcharts.
- Financial Aspects:- Include all key financial factors related to your business, such as capital required, potential funding source, current and future financial projections, balance sheets, cash flow statements, etc.
4. Choose your business structure
The next step is to choose the appropriate legal structure for your business venture. The common types of structure of business organisation are sole proprietorship, partnership, limited liability company, and corporation.
Your business structure will impact the taxes you pay and your liabilities.
Business structure types
Sole proprietorship: You can opt for a sole proprietorship if you are starting the business independently. In this case, you will be solely responsible for all debts and obligations.
Partnership: A partnership structure can be opted for when there are two or more business partners involved in a venture. These partners will hold personal liability for the business.
Corporation: If you opt for a corporation, your business will be considered an independent entity. So in this case, your personal liability will be separated from the company’s liability.
Limited liability company(LLC): LLC is a hybrid business structure ideal for small businesses. It gives the legal safety of a corporation along with the tax benefits of a partnership firm.
5. Register your business and get licences
Once you decide on your business structure, it’s time to initiate the legal procedures. You need to register your business venture and acquire various licences before you launch your business. The permits and licences you require mainly depend on the type of business, business structure, and location you are operating.
Some examples of business licences include building permits, local business licences, fire & safety permits, environmental clearance, healthy safety licences, trade licences, etc.
Legal checklist to start a new business
Following is a quick checklist you can refer to while setting up a new business:
- Business name & structure
- Register your business
- Federal & State tax IDs
- Employer Identification Number (EIN)
- Business Permits & Licences
- Business Bank Account
- Non-Disclosure Agreement
- Patents, Copyrights or Trademarks
- Business Insurance
6. Funding & financing
Do you have funding for your startup? Are you planning to borrow money for your new business?
Based on your business plan, find out how much funding you will need to start your business and run it until your business becomes profitable.
To determine how much capital is needed, you can perform a break-even analysis. This method helps you figure out when your business will become profitable. The break-even point is the point at which the total cost of production and total revenue for your business becomes equal. Entrepreneurs can use this method to find out the minimum performance their business must achieve to avoid financial loss.
The following is the formula for break-even analysis:
Break-Even Point = Fixed Costs ÷ (Average Price – Variable Costs)
Once you know the funding requirement, the next phase is to look for funding sources. Self-funding, business loans, investor funding, crowdfunding, etc. are some of the common funding options for businesses.
7. Get the right business tools
Running a business in the current fast-evolving world is not easy without the help of some business management tools. The right business tools can make your life easier and take away a lot of manual tasks. From automation tools and accounting software to CRM and project management tools, there are a variety of tools available for business owners or entrepreneurs.
Here is a few useful business software that can help you save time, cost, and effort in the business world.
- Accounting software: Making use of accounting software like QuickBooks or FreshBooks can help you track your expenses and income easily. It also helps you manage taxes and financial statements.
- Project management software: Project management tools like Monday.com, Asana, ClickUp, Wrike, etc save a lot of time and manual tasks on a daily basis.
- Customer relationship management (CRM) software: CRM systems are designed to assist you with sales and marketing. It allows you to track new leads, customer details, sales data and much more. Eg: Zoho CRM, HubSpot CRM, etc.
- HR software: HR software helps to streamline the employee recruitment and hiring process. Other features of HR software include payroll management, leave tracking, employee database, etc.
- Virtual private network (VPN): Virtual private networks (VPNs) enable users to connect to private and secure networks. Businesses can use corporate VPN services like NordVPN or ExpressVPN to offer secure remote access to your company’s internal network.
8. Market your business
Now comes the most exciting part. As soon as you are ready to launch your venture, it’s time to let people know about it and grab attention. Start building your brand by setting up a logo, your company website, and social media pages. In this era, having a strong online presence will help you grow your business faster. List your business in Google My Business Listing so that customers can find you when they search for products or services.
Consider building a marketing team who can work out new strategies and help you establish your business in the market. If you have a limited budget for marketing, then you can also make use of digital marketing tools like Hootsuite, Yoast, Google Analytics, Canva, MailChimp, Ahrefs, etc. Digital marketing tools will take off your workload and make your marketing process streamlined.
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