So you want to start a business, but you don’t actually know how.
In this article, we’ll walk you through the entire process of starting a business, from planning to launch.
Here are the steps on how to start a business:
- Decide on your business and business model
- Research, research, research
- Work out your financials
- Come up with a marketing strategy
- Create a business plan
- Create a Minimum Viable Product
- Register your business
Let’s jump right in!
1. Decide on your business and business model
First things first – you’ll need to decide on your business and a business model for it.
Are you selling a product, a tool, or a service? Is your business going to be an online one, or will you have a brick-and-mortar presence?
How will you monetize your product or service? How easy or hard is it for you to scale?
These are all questions you should be considering when deciding your business model.
Now, if you have a couple of ideas, and you can’t decide which to pick, don’t worry – you don’t actually have to narrow it down to one idea at this stage.
In fact, we recommend having a couple of options in your back pocket for now – once you move on to the research phase, it’ll be easier to identify which of these ideas has the most potential, and which ones don’t make the cut.
2. Research, research, research
This stage is of utmost important – you’ll need to do your due diligence, so that you have enough information to empower you to make the right choice.
If you choose the wrong idea to pursue, then the odds are stacked against you from the get-go. We’re not saying that it’ll be impossible to succeed, but it can definitely be way harder than if you pick the right idea.
Here are some types of research that you should be doing:
- Competitive research: who are the market leaders? Who will be your closest competitors? How are they currently doing? What are their strengths and weaknesses?
- Industry research: What are some industry trends? Where is the industry headed? Is the industry saturated or is there more space to grow? Are there any upcoming law or legislation changes that will impact the industry?
- Target audience research: What do your customers look like? What are their buying habits? What is the best way to reach them?
3. Work out your financials
By this point, you should have a pretty good idea of which ideas are more feasible, and which aren’t.
Now, the next step is to fine-tune your monetization strategy and work out your financials, to see if the numbers make sense.
How much does your product, service or tool cost? If you’re offering a free product or service, how are you intending to monetize? (You could run ads, offer a “freemium” model with a premium tier, or you might simply want to offer a free product, such as an app, with the goal of amassing enough users to sell and exit from the market).
What do your profit margins look like? How much money are you spending each month? What’s your runway (i.e., how long can you operate without running out of cash?)
Can you start your business using your own capital, or do you need to fundraise?
Once you have the answers to these questions, we also recommend building out a simple financial model with three scenarios:
- Base (what’s likely to happen)
- Upside (best case scenario)
- Downside (worst case scenario)
PS: You don’t need to build these from scratch – there are many templates that you can use as a reference, such as these.
Once you’ve crunched the numbers and evaluated your different ideas, you’ll want to hone in on the one idea that’s the most feasible.
4. Come up with a marketing strategy
Onto the next step… coming up with a marketing strategy!
You can have the best idea or product in the world, but if people don’t know about it, you’re not going to get any business.
Think about how you’re going to get your initial base of customers, and what marketing channels or strategies you want to employ. For instance:
- Email marketing
- Social media marketing
- Influencer marketing
- Pay-per-click (paid ads)
- Content marketing
5. Create a business plan
Now that you’ve thought through most of the aspects of your business, it’s time to pull everything together in a business plan.
Why create a business plan?
Firstly, if you want to raise funds and talk to investors, you’ll definitely need an official document for them to look at. Your business plan essentially serves as a roadmap that defines your goals and how you aim to achieve those goals, from marketing, financial, and operational standpoints.
Even if you don’t intend to raise funds, it’s a good idea to create a business plan anyway.
As you work on your plan and formalize your thoughts in a document, you’ll be able to work out the details and flesh out your idea into something that’s more tangible.
6. Create a Minimum Viable Product (MVP)
What’s an MVP? In a nutshell, it’s a prototype, or an early version of a product with just enough features to be usable by early customers.
These customers then provide feedback for future product development, allowing you to create the next iteration of your product.
The whole point of creating a MVP is to take a customer-centric approach, which helps improve your chances of success.
To unpack this: you can spend 12 months creating the perfect app, and working on it till you feel that it’s ideal. But once you release your app to the market, you might receive a bunch of feedback (from actual customers!) that makes you realize that this isn’t actually what your customers want.
The MVP approach prevents this from happening. You’re essentially seeking out feedback from an early stage, and this allows you to craft a product that truly addresses your customers’ needs.
And while this idea of MVP is rooted in the world of tech startups, it can definitely be applied to other businesses.
For instance, if you’re running an F&B business, get people to taste-test your menu before you launch, and share their feedback.
You can even run a soft launch (say, for a week) where customers get to enjoy 20% of the menu that’s still a work-in-progress – this helps you gauge demand and figure out which menu items are more popular, and which aren’t.
7. Register your business
With all the research, planning and prototyping, now’s the time to register your business.
There are a few steps involved here:
- Choose your business structure (sole proprietorship, partnership, LLC, C-corp, etc)
- Register your business name
- Register with the IRS
- Register with state and local agencies
- Apply for licenses and permits (if applicable)
This can be tedious (who likes administrative work?), but once you get it out of the way, you’re all set to launch.
To simplify the business registration process, consider working with a business formation agency. Read this comparison guide by SmallBusinessHQ to find top-rated service providers that can help you register your business
8. Go live!
Finally… it’s time to go live!
Congrats – all your hard work has culminated to this point. Do your victory dance, have a breather, and take yourself out to dinner.
Then it’s back to the grind – you’ll want to give your business plenty of TLC, and make sure that it flourishes.
Perseverance is the name of the game. As Steve Jobs famously said, “If you really look closely, most overnight successes took a long time.”
We’re rooting for you!