I may earn money or products from the companies mentioned in this post.
If you’ve found this article it’s probably because you just Googled “Steps To Start A Small Business” or maybe “How to start a home business” and I’m going to do my very best to answer your question.
While my education is in Engineering, I quit corporate life after less than six years and I’ve been self-employed for over 25 years. Honestly, I’m kind of a serial entrepreneur.
Over the years I’ve owned retail stores, tech consulting businesses, a prepared meal delivery business, and published websites just like this one. And that doesn’t even include the fun little side hustles I’ve done like raising worms or selling stock photos.
You see, I love starting businesses and have a lot of experience doing so.
So what are the steps to start a small home business?
When I set down to answer this question, I was sure I’d knock it out in just an hour or so at the computer, but once I started putting pin-to-paper (or fingers-to-keyboard) I came to the realization that the complete answer is much more complex when you delve into what I’ve actually done for the last 25 years.
But I’m going to give you the short answer here even though I got sucked down the proverbial rabbit hole and created a whole poject timeline for starting a business (I guess it’s true that you can take the boy out of Engineering but can’t take the Engineer out of the boy).
8 Big Steps To Start A Business
Keep in mind that these are the distilled steps to start a small business. The project timeline I created in getting to this list had nearly one-hundred steps, but the ones found below are just big ones to point you in the right direction.
I’ve presented these steps in the rough order you should address them, though there will be some overlap as you learn more and go back to revisit previous steps.
P.S. I’ll tell you more about that business startup project timeline at the end of this article.
1. Define The Problem Your Business Will Solve
Every successful business solves a specific problem for its customers. If you can’t define the problem you’re offering to solve, you have zero chance of success.
2. Develop The Solution You Are Offering
Once you know the problem you are solving you have to know how you are going to solve that problem. This might be a product or a service, or a combination of the two.
Regardless of the form of your solution, you must have it developed before you can actually consider starting a business.
If it’s a product, you need a prototype so you can prove it will work and better understand the cost of production.
If it’s a service, you need to actually offer that service so you can, once again, prove it will work and better understand how much of your (or an employee’s) time providing that service is going to take.
3. Understand The Market
Before you can consider actually investing your time or money into a new business you need to understand the market you’re entering.
In digging through my own experiences, I came up with over a dozen aspects that should be included in understanding the market, but let’s hit the big ones in this article.
- Define your service area
- Define your customer
- Define the outcomes you will provide
- Define the benefits you will provide
- List your competition
- Research competitive price
- Research the actual cost of goods or services
- Define your unfair advantage
In short, you need to know who you are competing against and how you are going to win that competition before you start your business.
4. Understand The Regulator Requirements
There is no short answer to how can gain a full understanding of all of the regulatory obligations you will soon be facing, but it’s imperative that you do.
You see, regulatory requirements for business come from all levels of government (city, county, state, and federal) and they are not the same in every location.
Here’s a simple example, some states require registering of every new business with the state, others don’t care, and most only care if you are going to incorporate or go into business in a more heavily regulated business.
Here’s the clearest advice I can give you in this short format article…
First, when you approach those who are tasked with regulating businesses, do so with kindness and respect. The vast majority of businesses that these people deal with are those that have made a mistake and are not out of compliance.
If you approach them asking for them to share their experience and wisdom, you will stand out from the crowd, and, for the most part, they will want to help you succeed.
Second, start with the most local level of regulators and work your way up. As a matter of fact, after you understand the most local requirements ask your new friend in that office who you need to talk to at the next level up.
This ‘local-up’ approach is going to save you a lot of time.
Start by Googling “Starting A Business In CITY, STATE”, where you replace the fully capitalized words with your actual city and state. Chances are you’ll find some city office that has some person(s) whose job(s) it is to answer this question.
5. Secure Funding
I want to be very clear here; I am a bootstrap kind of business owner and I’m not suggesting that you must borrow money to start a small business. On the contrary, I want to strongly suggest that you do not borrow money.
I encourage you to start a small business and save your earnings to expand or start a larger business. Work your way up and avoid debt.
However, I know that many people disagree with me on this point, so regardless of how you are going to fund your new small business, you should have enough information now to know how much money you are going to need.
The important thing to remember is that the vast majority of new businesses take time to become profitable. Fortunately, small businesses reach profitability sooner than larger businesses just because their startup and operation costs are less.
Still, you need to plan for enough capital to run your business until it has enough cash flow to survive on its own.
One of the saddest things in the world is to see a good business die because the owners ran out of money before the business had a chance to grow.
And let me stress that the easiest way to secure enough capital is to keep your startup and operations costs low. You can always upgrade as you grow.
6. Develop Your Marketing Plan
You have to start by knowing what your message is.
- Your 30-Second Elevator Pitch
- The Problem You Solve
- The Outcome You Provide
- The Benefits To Your Customers
Then you need a business name and a logo, but don’t go crazy spending money on a logo. There are lots of ways to get inexpensive logos and for a startup that’s good enough.
Also, don’t waste your money trademarking anything. If you’re small, you don’t have enough money to defend a trademark anyway. Save your money.
On the other hand, if you have something that is patentable, get a provisional patent before you open for business.
As for advertising, the nature of your business will define what marketing channels you’ll use to reach potential clients, but the biggest danger here is going too big too soon.
Not all businesses need a website, and damn few need one that you paid someone else to make. You only need a website for a startup if you’re going to be taking online orders.
You do need a Facebook page, a Google Local Business Listing, and a business card. You might need a flyer or brochure.
Keep your expenses low and don’t lock yourself into a marketing budget you can’t afford right now.
7. Soft Launch
Before you’re a real business you need to work the kinks out of your business operations and you want to do that with people who will forgive you if things don’t go as well as you hoped or promised.
A soft launch happens when you offer your product or service to a small group at a discount in exchange for them providing you with honest feedback.
This is your chance to make improvements before you have people leaving Google Reviews.
8. Launch Your Business
Congratulations, it’s time to tell the public about your business and start getting customers, growing your reputation, and making money.
A More Complete List Of Steps To Start A Business
As I mentioned above, in writing this article, I created a whole engineering-style Small Business Project Startup Timeline.
While the list above hits the big items, the whole timeline has those steps and more broken down into sub-steps and then listed in relative order of when you should do each step.
There are over 90 steps on that timeline.
Since I did the work of creating it, I spend some more time polishing it up and now I’m offering it to you for just a handful of dollars.
It took me many hours to create, but I know it will save you many more hours.
You can learn more about it at the link below.