Taking the plunge and starting your own business is definitely not for the faint of heart. You need guts, hard work, and a lot of luck to make it as an entrepreneur. From coming up with a great idea to creating a marketing plan and making sure you have the financial resources in place, where do you even begin to cover the startup essentials?
To help you get started on the right foot, we’ve come up with a business startup checklist you can follow to successfully establish your company:
1. A Product or Service that People Want
Entrepreneurship is a tough industry. The U.S. Bureau of Labor Statistics (BLS) discovered that 20% percent of new businesses fail during their first two years in operation, while only 25% of new businesses make it to 15 years or more, with 45% closing their doors within two decades!
To ensure success, in addition to having a great business idea, you also need to create products or services that people actually want. Here’s how you can make your business desirable for customers:
Determine your audience
Your target audience is the people you’re most likely to be able to help. This includes people with a need that your product or service can fill. As your business grows and evolves, your target audience may change. It’s important to be flexible and adaptable to ensure that you’re always meeting the needs of your customers.
Create a prototype
So, you have a good idea of what people want – it’s time to start creating a prototype. This will help you get feedback from potential customers and make changes based on their feedback. The prototype should be a basic version of your product that allows people to get a sense of what it is and how it works. It doesn’t need to be perfect, but it should be close.
Get feedback
When you have the prototype ready, start reaching out to possible customers and see if they’re interested in giving it a try. It’s important to get feedback from as many people as possible when creating a new product or service. Gauge their reaction and use their feedback to improve your product. Not everyone is going to like it, but getting feedback will help you make changes and improve your product or service.
2. Research Your Industry and Competition
Why is it important to research your industry and competition when starting a business? The answer is simple: you need to know what you’re up against. Every business checklist strongly focuses on market research because it will help you evaluate your chances of succeeding in your chosen industry.
So, how do you do it? Here are a few key things to look for when researching your industry and competition:
Observe the overall size of the market
Is it growing or shrinking? What industry trends are affecting the market? The goal is simply to better understand the industry landscape you’re entering. It can shed some light on what it takes to be successful and how much competition there is.
Check your major competitors
Start by researching your competition—looking at their website and social media presence. See what kind of content they are putting out there and how they are connecting with their audience. Reach out to some of their customers or clients to get first-hand feedback on their experience and use that to start developing your own competitive advantage.
Know your unique selling proposition
A unique selling proposition is what differentiates your business from the competition. It should be something that will resonate with your target customers and be front and center in all of your marketing materials. This will help you to attract the right customers and stand out from the crowd!
3. A Solid Business Plan
Whether you’re just starting or have been in business for a while, a well-thought-out business plan is essential for your company’s success. It should outline your business structure, products or services, target market, and marketing and sales strategies. This may seem like a lot of work, but it can help any small business to attract investors.
If you’re just using the plan to organize your thoughts or present it to a focus group for feedback, you can take a more relaxed approach and make a one-page business plan online! These are the common sections you should include:
Executive summary
This is a brief overview of your entire business plan. It should include a summary of your products and services, market analysis, marketing plan, management organization, and financial plan.
Company description
This section describes your small business in detail. It should include information on your business name, history, mission statement, values, and goals.
Products and services explanation
Here you’ll describe your products and services in detail. This should include information on what you offer, how it’s different from your competitors, and why it’s valuable to customers.
Market analysis
This section of the business plan is where investors focus because it explains the market for your products and services. It should include data on the size of the market, trends affecting the industry, and information on your target market.
Marketing plan
In this section, you’ll outline your marketing strategy. This should include information on how you’ll reach your target market, what methods you’ll use to promote your products and services, and how you’ll measure success.
Management organization
Here you’ll describe the structure of your management team. It includes information on who is responsible for each area of your small business, their qualifications, and how they work together as a team.
Financial plan and projections
In this section, you’ll present your financial projections for the next few years. Highlight the startup costs, operating expenses, revenue projections, and expected profits or losses.
4. Register Your Business
As a business owner, you have many responsibilities. One of the most important is ensuring your business is properly registered with the appropriate government agencies. Depending on your business type, this can include registering with the state, county, and/or city. Failure to register your business can result in hefty fines and may even prevent you from operating legally.
Taking the time to properly register your new company from the beginning will save you a lot of trouble in the long run. Here’s how to get started:
Name your business idea
Picking a business name is an important first step. This name will be used on your company’s official documents, from business licenses to invoices. If you don’t have any choices for a business name yet, you can start by brainstorming a list of potential names, then narrow it down based on criteria like availability and relevance.
Once you’ve settled on a business name, you can register it with your local government. In some cases, you may also need to register your business with the federal or state government.
Choose a business structure
In the early stages of starting a company, you’ll need to choose a legal business structure. Each has its own advantages and disadvantages, so it’s important to choose the one that’s right for your business. Here are the most common structures:
Sole proprietorship
If you’re starting a business and want to keep things simple, then a sole proprietorship is the way to go. Plus, there’s no need for red tape or formalities. However, sole proprietorships offer the business owner no protection from liability, meaning that the owner is personally responsible for all debts and liabilities incurred by the business.
Limited Liability Company (LLC)
LLCs combine features of both sole proprietorships and corporations. Like sole proprietorships, they’re relatively easy to set up and provide some protection from personal liability for business debts. However, LLCs also offer the corporate benefit of pass-through taxation, meaning that the business itself is not taxed on its profits – only the owners are taxed on their share of the profits.
Corporation
Corporations offer the strongest protection from personal liability for business debts and can raise capital more easily than other types of businesses. However, they are subject to double taxation, meaning that the corporation is taxed on its profits, and shareholders are taxed on their share of the profits when they’re distributed as dividends.
General partnership
General partnerships are easy to set up, similar to sole proprietorships, and they offer some personal liability protection against business debts. Unlike businesses owned by a single person, partnerships must have two or more owners. Partnerships are also less formal than corporations and usually require less paperwork for both setup and operation.
Open a business bank account
It’s important to keep your personal assets and business finances separate, and a company bank account will help you do that. You’ll need to choose the right bank for your business and consider factors like fees, services, and location.
Next, submit all the legal requirements needed by the bank, such as your company’s Articles of Incorporation or LLC Operating Agreement. Finally, a business decision about the signatory authority on the account must be made. This is the person or persons who will be able to access the account and make transactions on behalf of the company. Once you’ve taken care of these things, you’ll be ready to open your company bank account and get your business expenses in place!
5. Obtain a Business License
When starting a business, you’ll need to obtain certain licenses and permits in order to operate legally. Not only will this help you stay compliant with the law, but obtaining the proper licenses and permits can also help you build credibility with potential customers and avoid hefty fines when it comes to taxes. Before you get your business started, get these licenses:
Employer Identification Number (EIN)
This is a unique number assigned by the IRS that identifies your business for tax purposes. You’ll need this number when you file your taxes, and it’s also required in order to open a business bank account.
Small business administration’s license
This permit allows you to use certain government facilities, such as post offices and federal buildings. You can also get discounts on shipping rates and other benefits.
Other essential business licenses
Depending on your business, you may also need to get a license from your state or local government. For example, if you’re selling products, you’ll need to get a sales tax permit. And if you’re running a daycare center, you’ll need to get a license from the state Department of Human Services.
4. Secure Funding and Investors
Most startups require some form of funding in order to get off the ground. Startups.com offers a guide that covers several options for securing your funds. This blog post covers series funding, crowdfunding, obtaining a bank loan, and other popular options in detail.
However, securing funds can be one of the most challenging aspects of launching a business idea. Here are some tips to help you out:
Do your homework
Before approaching potential investors, it’s important to have a clear understanding of your small business and what it will take to make it successful. This means having a well-researched and realistic business plan, as well as a clear understanding of the market and the competition.
Make a strong pitch
Once you’ve done your homework, you’ll need to make a strong case for why your startup is worth investing in. Present a clear and concise pitch that highlights how your small business can earn them money. Keep in mind that investors want profitable businesses.
Know your audience
It’s important to tailor your pitch to each individual investor. You can tweak your business plan to put a spotlight on how your idea can meet their needs. For example, some investors may be more risk-averse than others, so it’s important to highlight the potential rewards as well as the risks involved in investing in your business.
Be prepared to answer tough questions
Investors will want to know everything about your small business, so you need to be prepared for some tough questions. Be honest and transparent in your responses, and make sure you have data and statistics to back up any claims you make about your business’ potential.
Don’t give up
Securing enough money for a startup can be challenging, but it’s important to stay persistent. Keep meeting with investors and tweaking your pitch until you find the right fit. Don’t forget that even if you don’t get money from traditional sources, there are always alternative options like crowdfunding platforms or small business loans.
7. Purchase Business Insurance
Many startup owners think they don’t need business insurance because they’re small businesses, but that’s not true! Even if you have a home business, it’s important to purchase one to protect yourself and your business.
The right insurance policy should align with your legal business structure. Before you start shopping around for the right insurance policy. There are four main types of company insurance:
Property insurance
It covers the physical premises of your business, as well as any equipment or inventory you keep on-site. This type of policy can protect you from damage caused by fires, storms, theft, and other events beyond your control.
Liability insurance
This coverage protects your company from legal claims resulting from your business’s activities, such as injuries or property damage. It will help pay for legal fees, settlements, and judgments against your company.
Workers’ compensation insurance
Employees who are injured or become ill as a consequence of their work may benefit from this policy. It’s required by most jurisdictions, and it may assist in paying for medical expenditures and missed income.
Business interruption insurance
Likened to the rest, this insurance will protect you financially if your company is ever forced to close from an event such as a fire or natural disaster. It’s essential for enterprises that rely on constant day-to-day operations to generate revenue.
8. Hire Employees and People You Can Trust
Hiring employees is a big step for any startup company. Not only do you need to find the right people with the necessary skills and experience, but you also need to make sure that they fit into your company culture. Here’s a simple to-do list for hiring the right employees:
Define the role you are looking to fill
Before you start interviewing candidates, take the time to define the role you are looking to fill. Do you need them to handle the accounting system? What skills are required for the role? Answering these questions will help you narrow down your candidate pool.
Use a variety of recruiting methods
There are a number of ways to find qualified candidates, so don’t limit yourself to just one method. Small businesses usually post job listings online, but you can also reach out to your network of contacts.
Conduct thorough interviews
Once you have a list of candidates, it’s time to conduct interviews. Make sure to ask about their relevant experience and skills, as well as their goals and motivation for wanting the job.
Check references
Before you hire employees, be sure to check their references. This will give you valuable insights into each candidate’s work ethic and professionalism.
Make an offer
Once you’ve decided on the right candidate, it’s time to make an offer. Be clear about the salary and benefits package, as well as any other expectations you have for the role. Once the offer is accepted, you can officially welcome your new first employee onboard!
9. Set Up Your Shop and Office Space
An office space may take a chunk of your startup costs, but it provides a place for employees to work and collaborate, and it helps to create a professional image. More than that, an office is essential for meeting with clients and potential investors.
For a brick-and-mortar business, setting up a well-designed shop gives a good first impression to potential clients and investors, but at the same time, it should meet the needs of your business. Follow this checklist:
Foot traffic
A high foot traffic area is ideal for businesses that sell physical products or services that people are likely to impulse buy. However, if your business requires appointments or has a longer sales cycle, then you might be better off in a location with less traffic but more qualified leads.
Competition
When choosing a business location, it’s important to consider the level of competition in the area. The market of small businesses may have less competition, but it’s always good to be strategic in attracting customers to stand out from the rest.
Stay online
With the rise of e-commerce, small businesses can sell items online to a larger audience than they would if they were selling in a physical store. You can do this to sell 24/7, which means that your customers can purchase items whenever they want.
10. Build a Website
According to data from Top Design Firms in 2021, 28% of small businesses in the U.S. still do not have a website. This is a surprisingly high number, especially given the importance of an online presence in today’s world.
Creating a website can be a daunting task, but it’s important to remember that there are many resources available to tick it off from your business checklist. Here’s how you can build yours:
Pick a good web host
Your web host will provide the platform on which your website will run. A good one will have a strong server infrastructure, good customer support, and reasonable pricing.
Choose a domain name
Your domain name should be catchy and easy to remember. It should also be relevant to your business.
Create great content
This is perhaps the most important part of building a successful website. The content on your website should be well-written, informative, and relevant to your business.
Promote your website
Once your website is live, you need to let people know about it! You can promote your website through social media, online advertising, or by creating informative blog posts that link back to your site.
Hire a web development company
Building a website by yourself can cost both your time and money, so hiring a reliable company to do it can be a huge benefit. A web development company can help you make sure that your site is built on a robust platform that can handle an increasing amount of traffic and data. Plus, add new features and functionality as your business needs change.
11. Create a Social Media Presence
Part of the startup checklist that you should not forget is social media presence. In this day and age, it is crucial that businesses have a presence on social media in order to connect with their target audience and gain new customers.
Here are some tips when establishing your social media accounts:
Pick the right platform
There are a lot of social media platforms out there, and it can be overwhelming to manage them along with your online store. Do some research and decide which platform or platforms align with your business. For example, if you’re a visual artist, you might want to focus on Instagram. If you’re a writer, Twitter might be a better fit.
Be consistent
While social media can connect you to your audience, it doesn’t mean you only use it on your opening day. It’s important to be consistent with your posting. You don’t need to post every day, but try to stick to a schedule, so your followers know when to expect new content from you.
Engage with your audience
Social media is about more than just broadcasting your own message. It’s also about engaging with your audience and building relationships. Make it an everyday business checklist to comment, like, and engage with your followers because most businesses thrive because of these interactions!
12. Stay Organized and Efficient
While it’s not explicitly included in the business plan, staying organized and efficient in your startup business is essential to success. A few key things you can do to stay on track are:
Pay taxes on time
Tracking your taxes can avoid penalties and interest, as well as keep your business finances in order. Get to know when tax deadlines are so you can plan ahead and budget for them.
Develop a record-keeping system
Invest in accounting software that will help you keep track of money, income, and customers. There are a lot of different accounting software programs out there, so do your research to find the one that is best for you and your business.
Check on your employees
No small business cannot operate without manpower. By checking in on them regularly, you can ensure that they are meeting expectations and not experiencing any stressful situations.
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