There are more than 28 million small businesses in the United States, making up a whopping 99.7 percent of all U.S. businesses, according to the Small Business Administration. When you consider some of the most popular reasons to start a business, including having a unique business idea, designing a career that has the flexibility to grow with you, working toward financial independence, and investing in yourself — it’s no wonder that small businesses are everywhere.
But not every small business is positioned for success. In fact, only about two-thirds of businesses with employees survive at least two years, and about half survive five years. So you may be in for a real challenge when you decide to take the plunge, ditch your day job, and become a business owner. The stage is often set in the beginning, so making sure you follow all of the necessary steps when starting your business can set the foundation for success.
Here are 10 steps that are required to start a business successfully. Take one step at a time, and you’ll be on your way to successful small business ownership.
Most likely you have already identified a business idea, so now it’s time to balance it with a little reality. Does your idea have the potential to succeed? You will need to run your business idea through a validation process before you go any further.
In order for a small business to be successful, it must solve a problem, fulfill a need or offer something the market wants.
There are a number of ways you can identify this need, including research, focus groups, and even trial and error. As you explore the market, some of the questions you should answer include:
Don’t forget to ask yourself some questions, too, about starting a business before you take the plunge.
You need a plan in order to make your business idea a reality. A business plan is a blueprint that will guide your business from the start-up phase through establishment and eventually business growth, and it is a must-have for all new businesses.
The good news is that there are different types of business plans for different types of businesses.
If you intend to seek financial support from an investor or financial institution, a traditional business plan is a must. This type of business plan is generally long and thorough and has a common set of sections that investors and banks look for when they are validating your idea.
If you don’t anticipate seeking financial support, a simple one-page business plan can give you clarity about what you hope to achieve and how you plan to do it. In fact, you can even create a working business plan on the back of a napkin, and improve it over time. Some kind of plan in writing is always better than nothing.
Starting a small business doesn’t have to require a lot of money, but it will involve some initial investment as well as the ability to cover ongoing expenses before you are turning a profit. Put together a spreadsheet that estimates the one-time startup costs for your business (licenses and permits, equipment, legal fees, insurance, branding, market research, inventory, trademarking, grand opening events, property leases, etc.), as well as what you anticipate you will need to keep your business running for at least 12 months (rent, utilities, marketing and advertising, production, supplies, travel expenses, employee salaries, your own salary, etc.).
Those numbers combined is the initial investment you will need.
Now that you have a rough number in mind, there are a number of ways you can fund your small business, including:
You can also attempt to get your business off the ground by bootstrapping, using as little capital as necessary to start your business. You may find that a combination of the paths listed above work best. The goal here, though, is to work through the options and create a plan for setting up the capital you need to get your business off the ground.
Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The business entity you choose will impact many factors from your business name, to your liability, to how you file your taxes.
You may choose an initial business structure, and then reevaluate and change your structure as your business grows and needs change.
Depending on the complexity of your business, it may be worth investing in a consultation from an attorney or CPA to ensure you are making the right structure choice for your business.
Your business name plays a role in almost every aspect of your business, so you want it to be a good one. Make sure you think through all of the potential implications as you explore your options and choose your business name.
Once you have chosen a name for your business, you will need to check if it’s trademarked or currently in use. Then, you will need to register it. A sole proprietor must register their business name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically register their business name when the formation paperwork is filed.
Don’t forget to register your domain name once you have selected your business name. Try these options if your ideal domain name is taken.
Paperwork is a part of the process when you start your own business.
There are a variety of small business licenses and permits that may apply to your situation, depending on the type of business you are starting and where you are located. You will need to research what licenses and permits apply to your business during the start-up process.
Small businesses run most effectively when there are systems in place. One of the most important systems for a small business is an accounting system.
Your accounting system is necessary in order to create and manage your budget, set your rates and prices, conduct business with others, and file your taxes. You can set up your accounting system yourself, or hire an accountant to take away some of the guesswork. If you decide to get started on your own, make sure you consider these questions that are vital when choosing accounting software.
Setting up your place of business is important for the operation of your business, whether you will have a home office, a shared or private office space, or a retail location.
You will need to think about your location, equipment, and overall setup, and make sure your business location works for the type of business you will be doing. You will also need to consider if it makes more sense to buy or lease your commercial space.
If you will be hiring employees, now is the time to start the process. Make sure you take the time to outline the positions you need to fill, and the job responsibilities that are part of each position. The Small Business Administration has an excellent guide to hiring your first employee that is useful for new small business owners.
If you are not hiring employees, but instead outsourcing work to independent contractors, now is the time to work with an attorney to get your independent contractor agreement in place and start your search.
Lastly, if you are a true solopreneur hitting the small business road alone, you may not need employees or contractors, but you will still need your own support team. This team can be comprised of a mentor, small business coach, or even your family, and serves as your go-to resource for advice, motivation and reassurance when the road gets bumpy.
Once your business is up and running, you need to start attracting clients and customers. You’ll want to start with the basics by writing a unique selling proposition (USP) and creating a marketing plan. Then, explore as many small business marketing ideas as possible so you can decide how to promote your business most effectively.
Once you have completed these business start-up activities, you will have all of the most important bases covered. Keep in mind that success doesn’t happen overnight. But use the plan you’ve created to consistently work on your business, and you will increase your chances of success.Read More
As a small business owner, you can have a lifestyle of freedom and flexibility not offered to an employee. However, being a small business owner also carries greater responsibility with many more tasks to juggle. Most small businesses have limited resources when launching, which means that, as the owner, you have many hats to wear, depending on the nature of your business.
First, a small business owner must be the principal strategist and planner. To understand the new business, as well as the necessary resources and strategies, it makes sense to start with a business plan and a marketing plan. You’ll need to do research, planning and writing to develop a plan, and expect to revisit and change it as needed.
Most small businesses need start-up capital to get established and grow their products and services. Depending on the business, some owners can bootstrap and start with a smaller budget. Other ventures require a small business loan to fund expenses for retail space, office equipment and hiring employees. You’ll also need to set up and maintain business bank accounts, payment processing, accounts payable and accounts receivable, and taxes.
Small business owners must comply with federal and state business licensing laws. From forming a limited liability company to creating legal contracts, they must know basics of the law and have access to an attorney if legal problems with customers or employees arise. You might need to write, review and sign legal contracts and sales agreements. When legal issues occur, you’ll need to consult a lawyer.
No matter how good your product or service is, you need marketing and sales to drive business. Marketing and sales strategies and implementations vary widely, depending on the business, and could include tactics such as print advertising, public relations, online marketing, networking, cold calling and commissioned salespeople.
In the beginning, many small business owners are responsible for providing all or most of the customer service duties. These include phone calls, email messages and follow-ups concerning product delivery and quality issues. As the business grows, it makes sense to automate and hire customer service people when possible to scale operations and growth.
As a small business grows, so do its hiring needs to accommodate more orders and faster growth. The owner needs to identify human resources needs, write job descriptions, screen and interview candidates, train, manage and pay employees. For some businesses, it makes sense to hire a dedicated HR manager to handle screening, hiring, training and employee-related processes.
A small business owner has many broad and diverse tasks and responsibilities that are essential for starting and managing a successful business. Depending on the type of business and the stage it is in, the roles and responsibilities change and the owner continually must adapt to thrive.Read More
The freedom to chase your entrepreneurial dream is one of the great foundations of America. Owning a business is a freedom the U.S. Census Bureau of Labor Statistics records 29.6 million Americans pursue today, supporting local communities with products and services while contributing millions of dollars and jobs to the American economy.
It also takes a tremendous amount of hustle, sacrifice and dedication. But what does that really look like across America?
Working with leading small business research agency Bredin, Kabbage surveyed 400 small business owners to understand the common professional and personal challenges of small business owners and how they balance their work- and home-life to pursue their passions.
The findings? All small business owners across industries – including retail, construction, home services, education, manufacturing, food and beverage, medical and automotive – have one undeniable trait: they’re highly motivated to succeed, and they make countless personal and financial sacrifices to build their businesses.
The data demonstrates the sacrifices small business owners (SBOs) make each year, forgoing what many of us take for granted—from time off work and meals with family to missed holidays or visits to the doctor or dentist.
Among the key sacrifices:
Beyond the personal compromises entrepreneurs make with vacations, family time and wellness, they also face financial challenges.
The Kabbage survey found almost half (47%) of SBOs use personal savings to pay for aspects of their business, while 21% use more than a quarter of these savings. Interestingly, using personal savings to start a business is most common among millennials (75%).
The data also shows small business owners are highly committed to doing what it takes to grow. When they have a cash surplus, they are most likely to put it back into their business rather than treating themselves or planning for their personal future:
Positive Outlook & 2018 Investments
It clearly is paying off. The data shows the sheer commitment of small business owners to succeed, and they remain highly optimistic about the future. Two thirds expect to end 2017 with higher revenues, with more than half anticipating earning 10% or higher.
Looking ahead to 2018, they also intend to make investments to improve their productivity and efficiency:
Small business owners represent an entrepreneurial army built on resilience, grit and sacrifice. They answer the calls to fix pipes at midnight and work through the weekend to serve customers. They’re truly the heartbeat of our economy and deserve an enormous amount of gratitude. Kabbage encourages everyone to remember to shop small and—with more insight into what it takes to be a small business owner—thank them for all they contribute.Read More
Retail sales, sporting goods
How would you describe what you do?
We sell climbing and camping equipment, canoes and kayaks, and related clothing and accessories. My job is the owner, so I’m the Chief Supervisor.
What does your work entail?
I largely supervise everything that goes on here, I have managers that do a lot of the work, and I supervise them more than I actually participate in everything that’s involved. We’re basically a toy store for adults, but not in a bad way.
I don’t work nearly as much as I used to. Until recently, I used to put in 50, 60 hours a week. Now, I’m down to 25 or 30 hours per week. I’m gradually weaning myself away from it and giving it over to my managers to do everything.
How did you get started?
Well, about 35 years ago, I was in college to get my degree in chemistry and realized that I was having too many problems with my allergies to the chemicals that I worked with and that I had to do something else. But I liked the area and wanted to stay, so I looked around to find something to do to support myself that I could stay in this area. I’ve always liked the outdoors, I was raised that way as a kid.
What do you like about what you do?
The interaction with people. We’re basically a toy store for adults, but not in a bad way. We used to advertise it as an adult toy store and people thought we sold sex toys. I would encourage anybody that has the potential and ability to do something like this, to do it because it is a lot more fun than working for somebody.
Like I said, we sell outdoor equipment, camping equipment, canoes and kayaks, and gear for outdoor sports. And that’s largely a toy store for adults.
What do you dislike?
The hassle and paperwork.
How do you make money/or how are you compensated?
We purchase stuff from vendors all across the country and then resell it.
How much money do you make?
I get a salary of about $26,000, plus I get a bonus depending on how well we do which is usually about about eight percent of my salary. But also, as chief stockholder, I get all income from the corporation. Last year, we netted $96,000 on $1.956 million in sales.
What education or skills are needed to do this?
Apparently, none, because I had my degree in Chemistry and I got into business without any real hassle. I’m sure having a degree in Business gives you an upper edge in learning since you would know you marketing and accounting and stuff like that. But I managed it fine by without having those things.
What is most challenging about what you do?
Dealing with the mail order places that I compete with that are discount-oriented.
What is most rewarding?
The interaction with customers. When you help someone when they have a problem.
What advice would you offer someone considering this career?
I’d say, if they’ve got the opportunity then to do it. There is a lot to be said for running a business yourself. If you do well, you get all benefit and if you screw up, it’s all your fault. But there’s an awful lot to be said for working for yourself because you don’t have to deal with other people telling you what to do.
How much time off do you get/take?
It varies, about two to four weeks.
What is a common misconception people have about what you do?
That I just come in at nine o’clock and go home at six o’clock and sell stuff. They have no idea how much earlier I come in sometimes, and how late we stay at times, and how many times we worked on Sundays or Saturday nights to get things done. People think we have banker’s hours.
What are your goals/dreams for the future?
My goals are to get out of working day to day and begin traveling, sightseeing, and hiking more. And to let my employees finish running the business until I die and give it to them.
What else would you like people to know about what you do?
I would encourage anybody that has the potential and ability to do something like this, to do it. Because it is a lot more fun than working for somebody else.Read More