Starting your own small business can feel like the ride of a lifetime, an incredible challenge, and a leap of faith — sometimes all at the same time!
Many people dream about the flexibility, fulfillment, and self-determination of becoming a small business owner. But that independence brings risks that deter too many people from chasing their entrepreneurship goals.
Owning a successful business might feel like a lofty, aspirational goal. But in fact, it’s very much within your reach. There are over 30 million small businesses in the United States, and they play a significant economic role, employing nearly half of Americans and generating 44% of all economic activity.
With confidence, hard work, and strategic planning, there’s no reason your business can’t be one of them. Keep reading for the basic steps for becoming a small business owner.
Start With an Idea
All new businesses start with an idea. If you’re thinking of becoming a small business owner, it’s because you believe you can provide something people are willing to buy.
That’s great — to be an entrepreneur, you need to dream big. But for your business to be viable, you’ll need to build on your idea. Of course, you could always franchise — that means you license an idea that already works from someone else. Franchised businesses come complete with branding, business plan, and all other kinds of assistance. It’s not especially creative, but franchising could be a great fit for you if you want to start a business and don’t have a clear idea.
First, get crystal clear on what you’ll be selling. Is it a product or a service? Is this an entirely new idea or something that’s already on the market? What makes you think you have what it takes to provide this? What sets you apart from the competition?
Then, you need to figure out who will buy your product — this is your target market. You’ll want to get to know them well because they’ll be paying your rent and bills. What do your customers care about? How does your business solve their problems, and what does it offer that they can’t get anywhere else?
In many ways, this is the fun, creative part of starting a new business. But it’s also the most important because the strength of your idea guides every other part of the process. If your business idea is clear and well-realized, everything else is easier, from securing loans to creating a website.
Create Your Business Plan
It’s great to dream about entrepreneurship — but to make your dreams a reality; you need to decide how to approach your fantastic idea and lay out a clear map for the road ahead — your business plan! Your idea is the reason you’re becoming a small business owner, but your business plan describes how you’ll get there.
Your business plan outlines your customers’ needs and explains exactly how your company meets them. You’ll need to do market research to get to know your audience and include your findings within your business plan. Then, you must demonstrate that you have the resources, knowledge, and capital to deliver on your promises. That means explaining every detail of your product/service, along with the nuts and bolts of how your business will stay afloat — and turn a profit.
Your business plan is essential, but it also shouldn’t be set in stone. As you grow and keep learning as a small business owner, you will inevitably adjust what you planned at first. That’s okay — the point is to have a carefully considered roadmap to guide you along the way.
Plan Your Business Finances
This is one of the most intimidating — but also necessary — steps to starting your own business. The ultimate goal of any business is to make money, so if your numbers don’t make sense, your whole business falls apart.
This is a vast topic that’s deserving of your independent research. But the basic version is that you need to crunch some numbers and determine how much you need to make to break even — and hopefully turn a profit.
First, think about startup costs — the money that you’ll need to launch your business. This could include expenses like equipment, renting out premises, and creating a website.
Once your business is in place, what will your overhead expenses be every month? Typically, these include paying for rent, employees’ salaries, equipment maintenance, and software. Do you have the money you need to get started? If you don’t, you’ll be looking into small business loans, business grants, private investors, and even crowdfunding.
The amount you need to earn to cover those monthly overhead costs is your break-even point. Money earned beyond that is profit. Remember, most businesses don’t turn a profit right away — depending on the industry, some can take up to two years! Ensure you have the cash flow to sustain yourself during this time, whether through your business loan, personal savings, or even keeping your day job.
Keep It Legal
For your new business to be successful, it needs to operate on the right side of the law!
Legally speaking, there are many different types of businesses. They include sole proprietorships, partnerships, corporations, and limited liability companies(LLCs). There are different advantages to each structure, so you’ll need to research and determine which is the best fit for you.
You should also look into what kind of licenses you need in your area, such as registering your business name (if you have one) and any location-specific permits to operate. If you plan to hire internal employees, you’ll also need an employer identification number or EIN.
You might also need industry-specific licenses or certifications, especially if your work is subject to safety concerns (like operating heavy machinery). This is also an excellent time to register for a business bank account — even if you’re a sole proprietor, having a separate account will make the process of filing your business taxes much simpler.
Build Your Team
The team you choose to hire will play a fundamental role in your business’ success — or failure. Many small business owners believe so strongly in their entrepreneurial dream and their power to make it happen that they neglect to recruit a team of professionals strong enough to help propel their business.
If you’re a sole proprietor, you might think this step doesn’t apply to you, but you’re mistaken. No one exists in a vacuum. To stay operational, you will need to collaborate or cooperate with others, whether or not you plan to hire your employees.
Think about it — there’s no way to avoid partnering up with other professionals because you don’t possess every single skill it takes to keep a business running. Accountants, equipment suppliers, and marketing agencies are just a few examples of people you might need to partner with.
It’s easy to think of employees and partners as replaceable, but the truth is that they represent your business and determine the quality of your work. Even after you’ve hired a great team, put great care into managing and building relationships with them. If your employees feel supported and appreciated, you’ll find they’re better at communicating with stakeholders, representing your brand to customers, and bringing innovative ideas to the table.
Put Your Local Brand Out There
It doesn’t matter how great your new business is if no one knows about it. That’s why marketing is so important — and there’s a lot more to it than what most people think of as “advertising.” All that work you did in Step 1 to refine your idea will come in handy here because you’ll have a clear sense of your brand identity and voice.
First, you need a logo and a brand book that clearly demonstrates who you are, and feels true to your brand voice. Your brand book will guide your team as it creates your SEO website content, designs your website and builds your social media presence. Then, you need to put time and energy into consistently reaching out to your audience by staying active on social media, regularly maintaining your website or blog, and growing an email list for your email marketing campaigns.
This is not a part of the process to skimp on or rush — your business’s online presence is the first thing most customers see, and you only get one chance to make a good impression.
You might also want to venture into paid advertising. Here, you will be guided by all the market research you did when you were dreaming, ideating, and planning. Do your customers read the newspaper or are they more likely to hang out on Instagram? Do they like a touch of humor, or do they want you to stay serious and show off your expertise?
Be guided by what your customers want, and you’ll be the talk of the town in no time.
Never Stop Growing Your Small Business
We’ve reached the end of this article, but becoming a small business owner is a never-ending process.
The world we live in is constantly changing, and your business needs to adapt along with it. That means catering to your audience’s changing preferences and keeping up with your competitors as they too strive to do better and grow.
It also means you never stop working at becoming a better partner, employer, and manager to your business stakeholders and that you stay on top of the latest marketing trends to determine which ones your audience prefers.
The entrepreneur’s life might sound complicated, but really, all it takes is a willingness to work hard, plan carefully, and believe in yourself. Your journey to small business success is just getting started.
We’re always talking about how to market, manage, and grow your small business more effectively. Subscribe to our blog to stay in the loop and keep working towards your dreams.
Article by Genevieve Michaels
Genevieve Michaels is a freelance writer based in Vancouver, Canada. She specializes in long-form content with a focus on B2B marketing, tech, and software. She comes from a professional background in contemporary art, and holds a Bachelor of Fine Arts in Creative Writing from the University of British Columbia