Starting a business can be an exciting time for entrepreneurs: one full of big dreams for the future. But starting a business also poses a significant risk and requires a great deal of commitment (both money and time) to succeed.
While starting a business can feel overwhelming, following these steps can get you on the path to success.
1. Refine your idea
Even if you think you have the next billion dollar idea, it’s important to think carefully about whether the concept is really a viable business.
“To truly understand the market and the needs of the market, you need to ask yourself a set of“ Why ”and“ What ”questions,” says Karen Kerrigan, CEO of the Small Business & Entrepreneurship Council. “Why are you launching the business? What’s the problem it’s going to serve in the market?”
Pass on your idea to trusted people in your network and ask for honest feedback. Think carefully about the reviews you receive and see if they can help you improve your idea. If possible, look for a way to test your idea, either by running a pop-up store or by offering a free service to some potential customers to see if demand meets your expectations.
2. Create a budget (for you and your business)
Although you may not need a formal business plan, you should have an idea of how much money you will need to run the business and how you will earn revenue.
“Finding out the entry costs and the selling price and all the components that make the economy work is very important,” says Tammy Halevy, executive director of Reimagine Main Street.
If you do not plan to make a salary during the first years of the business, you will need personal savings or other reserved funds to pay your living expenses until the business takes off.
3. Find out how to finance your business
While there is no “right” way to finance a business, this decision will have implications later on about the value of your business and its financial flexibility. The best source of capital for your business will depend on several factors, including your industry, your access to investment, and your feelings about debt.
Note that the vast majority of companies are self-funded by the founder or with money from family and friends, as more professional investors or lenders typically want to see a history before separating from their own capital.
4. Build your team of advisors
At a minimum, you will need a small business lawyer and an accountant. They can help you figure out the best structure for your business (whether it’s a sole proprietor, a limited liability corporation, or some other structure) and make sure you set aside the right amount of money for taxes.
“Hiring a great accountant may be the best use of your penny if you’re not a sole proprietor,” says Venkat Krishnamurthy, president of the small business networking platform Alignable. “You can do it yourself, but it’s not too much money and it will serve you well in the long run.”
5. Hire carefully
Once you can start expanding your business, take your time to build your staff. Remember that early hiring will help define the culture and tone of your workforce.
“Adding an employee is a big step, because it will change the nature of how you spend your time,” says Greg Ott, CEO of the Nav Small Business Credit Market. “But it can also be the key to unlocking the growth of your business. It really is, for most businesses, the way to scale, grow and earn more revenue.”
6. Market your product or service
It’s never too early to start marketing your business. The best approach will depend on your industry and your budget, but it’s important to start thinking about brand start-up and marketing.
While this will likely include building a website and using online marketing tools, it is also important to focus on building your network and word of mouth referrals. Try a few different methods to see what seems to work with your audience.
7. Prepare to pivot
Remember that Amazon started out as an online bookstore and Netflix used to sell DVDs by mail. Successful companies change over time, so expect to make changes to your business model if you see that one approach is not working.
“Many companies end up being in a different place from their initial starting point,” says Luis Ramos, director of business advice at Accion Opportunity Fund. “That’s why I always check the importance of going out and trying the product first. You can end up learning pretty quickly that what you think the market wants is not what you want or need. ”