How to Start a Business
From the initial idea phase to the final launch, the process of starting a business takes significant time, effort, and money.
Although some parts of the process will be unique to your individual business, there are many commonalities that most entrepreneurs experience as they go about starting their businesses. In this guide, we’ve broken down the five initial steps you’ll want to take as you’re starting your own business.
We’ve also provided a variety of resources so you have access to more information as you progress through different stages of the process.
1. Research and Choose a Business Idea
In order to determine what kind of business you want to start, you need to perform adequate research about a potential idea, considering things like market demand, target audience, competition, and more.
You’ll also want to think about your own existing skills and how they may play into your business idea, as well as startup costs, industry, resources, and any opportunities you might have to test your idea before deciding to bring it to market.
2. Start Your Business Planning
Adequate planning is essential to ensure that you set your business up for success.
First, you’ll want to choose your business name and make sure that it’s legally available for use. Next, you’ll want to draft and finalize your business plan.
As you write your business plan, one of the most important steps will be deciding on a legal structure for your business. Your legal structure, also called your business entity type, will determine how your business is organized and how you’re taxed. You may want to consult with an attorney, accountant, or tax professional during this step.
More Startup Planning Resources
3. Make Your Business Official
In order to make your business official (and legal), most entity types will need to register with their state.
Additionally, although there will be some variation based on location and industry, you’ll likely need to get some type of business license or permit to operate legally.
Next, you’ll also want to apply for an employer identification number, or EIN, with the IRS. Your EIN, also known as your business tax ID number, will be used for tax purposes—it will also be helpful when you’re applying for a bank account, credit card, or business loan.
4. Get Funding and Organize Your Finances
It can be more difficult for new businesses to access financing in comparison to more established companies, but there are still a variety of options available, especially if you have a solid business idea and thorough business plan.
In addition to looking for and applying for funding, you’ll also want to take initial steps here to organize and manage your finances. You might start the process by:
- Opening a bank account and getting a business credit card
- Creating a business budget
- Choosing a business accounting software
- Finding a business accountant or bookkeeper
5. Launch and Grow Your Operation
You’re officially ready to open for business! Now, your next steps will likely depend on your individual business:
Do you need to find a location? Negotiate with your suppliers? Develop a marketing strategy?
Remember that you have your business plan to guide you through the next steps in the process as you navigate running and operating your small business.
Industry Guides: Learning to Start a Specific Type of Business
The initial steps involved with starting a business are largely the same—regardless of the type of business you’re looking to start.
However, if you’re looking for more specific advice—say, the entity type that’s better-suited for a brick-and-mortar retail business compared to an ecommerce business, or tips to keep in mind when looking for a jewelry supplier—check out our “how to start a business” guides below:
State Startup Guides: How to Start a Business in Your State
Every state has its own guidelines for entrepreneurs that are looking to start their own business. From licenses and permits to fees and documentation requirements, you’ll need to follow your state’s specific procedures in order to legally launch your business as quickly and efficiently as possible.
That’s where our state-by-state guides can help. Below, you can find information on how to start a business in your state.