Starting a small business may appear intimidating and complicated for first-time entrepreneurs. There are lots of tasks to complete, boxes to check, papers to be filed, and processes to be learned. Every successful small business begins from the ground up. 

No matter how eager you are to launch a product, investing the time to lay a strong foundation now will improve the chance that your business will endure and sustain itself over the long run. 

However, where do you even start? There are various approaches to starting a small business, and there are numerous important considerations to make. This in-depth blog on how to start a small business will help remove uncertainty from the process and increase your chances of success by giving you a comprehensive look at being a small business owner.

In this guide, we will provide you with a complete small business checklist, from formulating your business concept to registering for licensces and expanding your enterprise. Are you ready to take the first step towards owning your own business? Read on to know more! 

What is a Small Business?

Businesses can be categorized into various segments, including large, medium, and small businesses. The division they fit in is decided upon various factors, such as the employee size, business revenue generated, and production capabilities. 

A small business usually has up to 49 employees and generates less than $50 million in revenue annually. Moreover, small businesses are usually owned by individuals, families, or small partnerships but not by large corporations as their subsidiaries. 

A small business could be anything, from a candle-making or catering business from your own home to a gaming app development firm you started with your college friends. As long as you fit the criteria of a small business, you can classify yourself as such. 

Why Should You Start a Small Business?

We'll examine the numerous advantages of starting a small business and the methods an entrepreneur can use to select a successful and sustainable endeavor. 

• Small business units can make decisions and take ownership more easily because they have fewer stakeholders. Sometimes, the owner owns the business, and it can be classified as a sole proprietorship. 
• Compared to large corporations, small businesses become more adaptable because the owner feels more independent in managing the business and has more freedom to make decisions.
• Small business owners can explore more opportunities to test innovative concepts in the market, unlike corporations or LLPs, which cannot take such risks as they would require permission from all the stakeholders. This enables greater market insights through experimentation. 
• The government offers tax incentives to small business owners, especially women-owned businesses managed by a team of women executives and professionals, which can help them launch their enterprises. Registering a business can provide access to these programs and large tax savings. 
• Small businesses can provide more job opportunities to the local community, helping their town or locale grow and contributing to various community programs and causes. 
• With a small business, you can enjoy being your own boss, having flexibility in decision-making, and having a work-life balance. 

How to Start a Small Business?

Bringing a concept to the market or realizing a dream usually requires a sequence of carefully planned business decisions. While not all businesses take the same path, most of them include the following small business checklist:

Step 1. Determine Your Business Concept

The first step to take before starting a small business is to make money off of your passions while keeping two other essential components in mind: profitability and skill. The business you start must be profitable and something you're skilled at. For instance, you may enjoy music, but how feasible is your business idea if you aren't a great singer or songwriter? 

Furthermore, if you want your business to be successful, you need to find a problem that you can address with your skills or products. An ideal business should create a unique value in people’s lives. 

However, it won't be easy to corner the market if you're producing the same product as other nearby stores. For example, if you love making soap or would like to open a soap shop in your small town, it may not be feasible if there are already three more shops in the town and your product does not have any Unique Selling Proposition (USP). 

You will be required to think or come up with a unique selling proposition that makes your product different from the rest. For instance, let’s talk about Stripe. Stripe is similar to PayPal, yet it stands out in its own way. It gives the businesses and their developers the control to manage their payment systems. Stripe offers full control over their software and APIs, and it eliminates the hassles required to bring disparate systems together. 

To stand out in this competitive market, you will have to think outside of the box. 

Consider Popular Business Ideas

Which type of business to launch? Think about one of these common business ideas:

• Start a Franchise
• Start a blog
• Start an online store
• Start a cleaning business
• Start a freelance writing business
• Start a clothing business
• Start a pressure-washing business
• Start a consulting business
• Start a photography business
• Start a daycare 

If you want more business ideas to start from home or an office, observe the daily life of people around you and listen to their concerns and how you can provide a solution to them. Once you have your answer, it’s time to make your business plan. 

Draft a Business Plan

There are a few important factors to take into account before deciding which type of business to start. One of the first steps of how to start a small business is to make a comprehensive plan by asking yourself the following questions:

• What kind of funding do you have?
• How much time will it take to start your business?
• Where would you rather work at—a workshop, an office, or from home?
• What are your passions and areas of interest?
• Which talents or expertise do you have?
• How can you turn your passion, interest, and skills into a profitable business?
• What could be the USP of your business your business?
• How quickly do you need to grow your business?
• What kind of assistance from the government can you receive to start the business?
• What kind of investment does your business need?
• Do you require any special licenses and tools? 

Your business plan should have an answer to all these questions and options for dealing with other situations that may pop up in the future. 

Step 2. Research Your Competitors and Market

You should devote just as much time to your market research as to product development. Both these aspects go hand-in-hand to ensure you attract customers and entice them with your products. One of the best answers to how to start a sustainable, small business is to establish your uniqueness early on. Your products or services should solve a common problem that will create an impact on your customer’s lives. 

In a nutshell, you must establish a unique selling proposition (USP) for your business that sets it apart. To that end, you must conduct one of the most important and underrated steps to starting a small business: market research. 

A comprehensive market research will help you understand the needs of your target market and the products and services offered by those in your niche. It will also let you understand underserved segments and how you can leverage your products to target those customers. There are various aspects to market research:

1. Primary Research

It involves gathering information directly from potential clients instead of relying on historical data to come to conclusions. You can conduct surveys, interviews, and questionnaires to find out what customers want. You can even launch your own one-page website with a form and collect information. 

2. Secondary Research

Secondary research uses already-existing information sources, such as census data, third-party surveys and research, and other available data points. Although the existing data might not be as comprehensive as primary research, it can still be examined, collected, and evaluated in a variety of ways suitable to your needs. A good market research strategy involves both primary and secondary research methodologies. 

3. Understand The Research

Once you have your data, analyze it to identify the product strength of your competition, your target segment, market demand, and how you could give yourself a unique advantage. Multiple techniques help you get an overview of your market and product and how you can enhance it. Some of these are:

1. SWOT Analysis

It helps you identify your strengths, weaknesses, opportunities as well as threats. By examining the data regarding your product or idea's potential marketability, a SWOT analysis can assist you in deciding where to take your idea and help you make informed decisions.

2. PESTEL

The acronym stands for Political, Economic, Social, Technological, Environmental, and Legal. With this strategy, you can identify possible roadblocks beyond your control that can disrupt your business and how you can plan for them. 

3. VRIO Analysis

It stands for Value, Rare, Inimitable, and Organizable. This planning tool helps you identify products within your portfolio that can give you a competitive edge. It also lets you examine your resources and how to enhance them. 

4. Competitive Analysis

With this method, you can gather data from your competitors and directly compare your products and services with them. Your analytical findings can help you identify KPIs that you can work to achieve and components of your business that require modifications. 

Step 4. Create Your Business Plan

An operational business plan is an active document that acts as a startup business's road map. Not only will it help you streamline your business operations, but potential investors, financial institutions, and company management will also find this document easy to comprehend your business and its goals. In your comprehensive business plan, don't forget to include these sections:

1. Executive summary

Although it should be written last, the executive summary should be the first section of the business plan. It outlines the proposed new business and highlights the company's objectives and strategies for achieving them.

2. Company description

The company description explains which issues your product or service solves and the reason why your business or idea is superior.

3. Organization and structure

You need to decide the ownership structure of your business, like whether it would be a limited partnership, sole proprietorship, or a limited liability limited partnership. Additionally, write about the kind of business you anticipate, the risk management techniques you suggest, and the people who will staff the management organization.

4. Mission and goals

This section should comprise a clear mission statement that outlines the goals of the company and the steps necessary to achieve them.

5. Products or services

The operations of your business are outlined in this section. It covers the products you will sell to customers, how they stand up against those of your present competitors, how much they will cost to manufacture, market, and innovate, who will make the products, and how you plan to source materials.

6. Create a Marketing Plan

The SWOT analysis, competitive analysis, and features of your product or service are all outlined in the marketing plan. Besides that, your strategy for how you will market your product is also included in this section. Whether you will be sending out newsletters, creating a website for brand awareness, or utilizing newspaper or social media ads should all be outlined in your plan. 

7. Create a Financial Plan

The business financial plan may be the most important part of the business plan since the business cannot proceed without funding. Your financial plan should contain projected financial statements, including an income statement, balance sheet, and statement of cash flows, as well as a suggested budget. It should also include your investment details. 

Besides, if you are planning to take a business loan, everything should be mentioned regarding that as well, like how you are planning to raise funds to support your business initiatives. The reason behind this is that the business plan becomes a foundation to convince investors to invest in your business. If the plan doesn’t contain solid points or proven strategies, it is highly difficult to get investors to back your idea. 

8. Start Planning for Taxes

Establishing a tax plan is among the most crucial things a small business can do from the start. There are numerous types of taxes that you might be liable for, such as sales tax, property tax, income tax, and self-employment tax. Taxes can be complex, and that’s why you will have to get in touch with a lawyer and an accountant to handle all the legal duties associated with registering your business. 

9. List of Licenses Required According to State and National Regulations 

Decide whether you need to apply for any special permits or licenses. It’s better to apply for all the necessary licenses beforehand so there won’t be any roadblocks when starting a small business. 

10. Describe Your Selling Model 

Will you sell your products and services to businesses, government agencies, or customers? Will you need a retailer or directly sell to the consumers? These details, along with whether you will need a physical storefront, an online store, collaborate with marketplaces, or combine all 3, should all be detailed in the selling model section.

Step 5. Choose Your Business Structure

One of the biggest decisions of your small business checklist is to choose an ownership structure. Take into account how various business structures will affect your daily operations, taxes to be paid, and whether or not your personal assets are in danger when structuring your business. There are several types of business structures, such as:

• LLC: Your personal liability for business loans is limited by an LLC. LLCs need to have a registered agent and can be owned by one or more individuals or businesses. These owners are known as members.
• Limited Liability Partnership (LLP): Similar to an LLC, licensed business professionals, such as accountants and attorneys, usually use an LLP. A partnership agreement is necessary for these arrangements.
• Sole Proprietorship: One option to think about if you launch a solo business is a sole proprietorship. From a legal and tax perspective, the business and the owner are the same. 

Step 6. Register Your Business and Get Licenses

After deciding on a business structure, there are various legal issues to be taken into account when starting a small business. A useful checklist of things to consider when starting a business is as follows:

1. Choose Your Business Name

Make this a rule of thumb while generating a business name: make it memorable but not extremely difficult. If you cannot think of anything, it is best to take the help of generator tools. 

If it is available, select the same domain name to create your online identity. After deciding on the name, you will have to register your business name such that you can trademark the name and no one else can use it any way without your approval. Remember that a company name cannot be the same as the name of another state-registered company. 

2. Register Your Business and Obtain an EIN

By submitting forms to your state's business agency, you can formally establish an LLC or another type of business entity. Selecting a registered agent that will accept legal documents on your business's behalf is a necessary step in this process. You will also need to pay a filing fee. You can apply for licenses, tax ID numbers (TIN), and business bank accounts using the certificate that the state will send you. You may also need to apply for business licenses according to your local and country laws.  

The next step is to apply for an EIN or employer identification number. All companies need to have a federal employer identification number, with the exception of sole proprietorships that do not employ anyone. IRS will generate your EIN instantly if you apply online.

3. Get Appropriate Licenses and Permits

Your jurisdiction and industry will determine the legal requirements. Most businesses require a combination of state and local licenses to operate. For information on local licensing, verify with your local government office or even a lawyer, and complete the application for applying for a business license seamlessly. 

Step 7. Get Your Finances in Order

Your financial details are another cornerstone of starting a small business. Follow the given steps to streamline the process:

1. Open a business bank account. 

Keep your personal and business finances apart. The business name and business tax identification number (TIN) are required when opening a business bank account. You can use this business bank account for all of your business's transactions, such as billing clients and suppliers.

2. Get accounting software and other assets

To manage and track inventory if you sell products, your accounting software must have an inventory function. Financial statements should be able to be generated by the software, along with ledger and journal entries. Furthermore, purchase any necessary assets. For instance, if you are starting a car cleaning, a lawn care business, or a tech company, you will need the appropriate equipment, bill generator, and resources to operate. 

3. Determine your break-even point

You need to estimate your startup costs before you can fund your business. Make a list of everything you need in terms of physical supplies, find out how much professional services will cost, figure out how much it will cost for any licenses or permits you need in order to operate, and figure out how much office space or other real estate will cost.

Step 8. Fund Your Business 

There are numerous options for financing your business, and some are more easy to get, while others demand a significant amount of work. There are two types of funding: external and internal.

Internal financing includes:

• Personal Savings
• Credit Cards
• Money from friends and family

Business owners can obtain external funding as well. This method of funding includes:

• Small business loans
• Small business grants
• Loan Providers
• Angel investors
• Venture capital
• Crowdfunding

Step 9. Apply for Business Insurance

Even if your business is small and you don't employ anyone, you still need to have insurance. Your method of operation and the risks you face will determine the type of insurance you need. As your company expands, you might require more coverage and more than a single type of policy.

An insurance agent can locate policies from insurers that offer the best rates and assist in determining what coverages are appropriate for the business you run.

Step 10. Market Your Business

Many entrepreneurs spend so much money developing their products that they don't have a marketing budget when they launch. However, marketing your business is a vital step as it ensures your customers find you and purchase from you. Follow the given small business checklist to draft the right business marketing strategy:

1. Create a Website

Having a website is essential, even if your business is physical, since about 76% of consumers actually look at your website and online presence before visiting you. In addition, building a website is a quick process that can be completed in a weekend. 

You can create a one-page website to sell goods online with email providers like Neo or a dedicated no-code website builder. Alternatively, you can get a website and email hosting plan for small businesses to save money. 

2. Optimize Your Site for SEO

Once you have an online store or website, focus on search engine optimization (SEO). In this manner, the search engine can direct a prospective buyer to your website when they type in particular keywords related to your offerings. Utilize any of the myriads of SEO tools available online to help you optimize your website. 

3. Develop a Social Media Strategy

You should have a definite presence on social media to connect with your prospective clients and create brand awareness. Share engaging and pertinent content with your audience, answer queries related to your products, and encourage your buyers to share reviews of your service and products to gain more authority and user trust. Optimizing your social media platform to redirect user traffic to your website is a great off-page SEO practice. 

Wrapping up, 

Starting a small business requires persistence, hard work, and patience. However, if you're prepared to work hard, it can be a terrific way to realize your goals. Make sure you conduct thorough research, create a strong business plan, and adjust the course as necessary. Additionally, remember to maintain organization and focus once your business has been established in order to expand it further. Use this exhaustive small business checklist to create your business plan today!

Frequently Asked Questions (FAQs)

Q1. How can I start a small business without any funding?

Various funding sources are available for fresh startups, and most of them require a business plan to be approved. These include venture capital, angel investors, crowdfunding, private grants, and the SBA. You can also look at ways you can start a no-investment or low-investment business. 

Q2. Which type of business structure works best?

Your ideal business structure will depend on the type of business you create, the scope of your industry, and your goals. However, an effective organizational structure should support your business in establishing reasonable objectives and completing assigned work.

Q3. To start a small business, do I require a special license or permit?

The type of business you would like to start and your location will determine the answer to this question. Certain businesses, like restaurants, need a specific license or permit to operate. Others, like home daycare providers, might need to register with the state. Check with your local government and decide if your business needs a license or permit besides a mandatory business license.