01. Idea
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Step 1: Choose a Business Idea
The first step in starting a business is discovering your perfect idea. Instead of waiting for inspiration to strike, actively seek opportunities by observing everyday challenges that frustrate people. Pay attention to moments when you find yourself thinking "there must be a better way." Your unique combination of skills, life experiences, and insights could hold the key to solving these problems. What makes the best business ideas isn't just their originality – it's their ability to solve real problems in ways that people will pay for.
If you're stuck or want to further develop your idea, Our Business Idea Library contains detailed blueprints of hundreds of proven business models, complete with startup requirements, typical challenges, and success factors. You can also find inspiration and practical guidance from our Startup Spotlight series, where successful entrepreneurs share candid stories about their journey from idea to profitable business, including the mistakes they made and lessons they learned along the way.
Step 2: Market Research
Your business idea might sound perfect in theory, but its success depends on whether customers will actually open their wallets for it. This step helps you understand your future customers on a deeper level – their desires, frustrations, spending habits, and decision-making processes. You'll also study your competitors not just to copy them, but to find gaps in their offerings that your business could fill. By the end of this step, you'll have a better idea about whether your idea has real potential.
Step 3: Evaluate Feasibility
The next step tests if your business can make money. Start with basic math: how much will people pay for your product or service? How many customers can you realistically get each month? Then subtract your costs - materials, supplies, equipment, marketing, and other expenses. The difference shows your potential profit.
If the numbers show you can't make a profit, you'll need to adjust your prices, cut costs, or rethink your idea. This step helps you spot problems early, before spending time and money on an idea that won't work.
02. Registration
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Step 1: Decide On The Business Structure
The first step in registering your business is choosing its legal structure. Your choice between sole proprietorship, general partnership, LLC, or corporation affects your tax obligations and personal liability protection.
Step 2: Select A Business Name
After choosing your business structure, you'll need to pick a name for your business. The rules for naming a business depend on the state and business structure. Sole proprietors can use the name of the owner or register a DBA (Doing Business As), while LLCs and corporations need to do a name search to verify no other business in your state has registered the same name.
Step 3: Get An EIN
Many businesses will need an Employer Identification Number (EIN), which is like a Social Security number for a business. While sole proprietors working alone can use the owner's personal Social Security number, business structures usually require an EIN.
Register for an EINStep 4: Obtain Any Professional Or Industry Licensing
Some businesses require state approval before they can operate. Every state has different requirements, but fields like construction, finance, healthcare, and personal care services often need specific licenses or certifications.
Check with your state's licensing department to learn your requirements.
Step 5: Apply For Business Licensing
Most local governments require businesses to register and obtain licenses. Each city and county has different rules and permits based on your location and type of business.
Step 6: Business Tax Registration
Most states require businesses to register for a sales tax license (sometimes called a seller's permit or business tax registration) to collect sales tax. If you buy items to resell, you may also need a sales tax exemption certificate (also referred to as a resale certificate), which allows you to purchase inventory without paying sales tax.
Step 7: Building & Zoning Permits
If you're opening a physical location or running a business from home, you must comply with local building and zoning laws. These regulations determine where you can operate and what building standards you need to meet.
Contact your local planning office to learn what permits you need before you start setting up your business location.
03. Funding
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Step 1: Complete A Business Plan
Now that you've handled registration, it's time to map out your finances and operations. While many people only write a business plan when seeking loans or investors, it's a valuable tool for every new business as it forces you to calculate real numbers, think through your operations, and spot potential problems before spending money.
Step 2: Explore Funding Options
Once you know how much money you need to start your business, it's time to look at funding options. Common ways to fund your business include using your own savings, borrowing from family and friends, getting a bank loan, or finding investors. Each option has different requirements, benefits, and obligations, so take time to understand which funding sources is best for your business.
Step 3: Secure Funding
After figuring out the best funding options and how much money you need, it's time to secure the money to start your business. This might mean gathering your savings, applying for loans, pitching to investors, or talking with family and friends about investing.
04. Operations
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Get Ready To Launch
With the registration and funding in place, we turn to getting the business up and running. While each business will have unique requirements, this section provides a checklist of common items to work on before opening.
Here is a list of common items, but feel free to add or remove based on your business type.
Location
Whether you need a storefront, office space, or plan to work from home, your business needs a base of operations. Research lease options, building costs, and local regulations to find a location that matches your business plan and budget.
Equipment
From computers and manufacturing machines to specialized tools and vehicles, acquire the equipment needed to serve your customers.
Suppliers
Begin setting up accounts with suppliers for your inventory, materials, and business supplies. Research prices, quality standards, and delivery times to select vendors who can support your business needs.
Marketing Plan
Map out how you'll attract customers and what you'll spend on advertising. Set your initial budget and select your advertising methods.
Online Presence
Create your business website and set up social media accounts. Determine which online platforms work best for connecting with your customers and showcasing your products or services.
Bookkeeping
Whether using accounting software or hiring a bookkeeper, you'll need a system to track money coming in and going out of your business to stay on top of taxes and to monitor the business's financial health.
Payment Processing
Decide how you'll accept payments from customers. Compare credit card processors, mobile payment systems, and online payment options to find the right fit for your business.
Staffing
If you plan on hiring employees, determine your initial staffing needs and create job descriptions set up your payroll system and understand employment requirements before beginning the hiring process.
