Starting a business is something many people dream of, but few follow through with. The truth is, launching a business is scary—full of unknowns and big risks.
Not everyone can handle the complexities of commerce or the pain of seeing hard work go to waste, and we’ll be the first to admit that starting a business is indeed hard work.
That doesn't mean it's impossible though, and this guide is here to point you in the right direction. We’ll dive deep into the minutiae of starting a business and give you ten key steps you can follow whether you’re just trying to turn a hobby into a little extra cash or want to build the next household name in global brands.
Before diving headfirst into this risky venture though, it’s essential to ask yourself one crucial question...
Why Do You Want To Start a Business?
There’s plenty to think about before starting a business, but if you were going to pick the single most important one, it’d be to reflect on your motivation.
Asking yourself why you want to start a business will help you set goals and create patterns of behavior or habits that’ll help you through thick or thin...and trust us there'll be plenty of both!
It's advised to set your goals upfront, as they'll inform your decision-making as your business grows and changes.
For instance, many people like the idea of giving up their day job, and this might be the motivation behind their business ventures. If this is the case, the goals of the business start revolving around generating enough revenue for you to replace the salary you had before. Perhaps, you may decide to structure your business as a company and write your paychecks as CEO.
If you haven’t thought about what's motivating you to start a business, you're going to find yourself in hot water when you have to make critical decisions later on.
That's why it's imperative to take a moment to think about why you’re doing this and create goals for yourself. You might shift your aims later on, but you’ll need them as guiding lights as you start your business and get it off the ground.
Let's get into the nitty-gritty. Here are 10 actionable steps to starting a successful business.
10 Steps to Starting a Business
1. Refine Your Business Idea
Most entrepreneurs start businesses with a firm idea in mind of what they want their business to be. A business idea isn’t born fully formed, of course, but the first thing on the agenda when it comes to starting a business is to develop and refine your business idea.
With this in place, you can go ahead with the rest of the steps on this list with confidence that you’re onto a winner.
So, how do you go about refining your business idea?
Here are a few things that you ought to consider doing...
Research your target customer
If there’s one thing every successful business has in common, it’s a thorough understanding of its target customer. Whether you're B2B or B2C, it’s important to try and understand your target customer as much as you can. This means doing extensive consumer research using a variety of techniques, and even sitting down with as many people as possible who might fit your target customer profile.
That’s why businesses started by entrepreneurs solving their personal problems often do well. They already understand the market because they are the customer.
If you have a basic business idea in mind, this research will help you refine it since you’ll gain a better understanding of your customer's behavior and needs.
Analyze the competition
It’s also a good idea to familiarize yourself with the different companies and products that are already in the niche in which you want to start your business.
What are their products like, and what business practices do they follow? Do they set themselves up in a certain way, and if so, why?
Understanding the entire competitive landscape will give you an excellent idea of what you should and shouldn’t do, as well as highlight any unserved or underserved niches or problems within the area that you can capitalize on.
You should even consider trying your future competitors’ products and services out to see where their strengths and weaknesses lie and understand their respective customer journeys.
Figure out your brand
As you hone in on your business idea, it’s important to start thinking about your brand and how you want to position yourself in the market. If there are niches that your competitors don’t hit or problems they don’t solve, broadcast that you’re going to do so with your branding.
That way, you can take over your chosen niche even quicker—with poor branding, you’ll have to spend even more on marketing to try and make people aware that you’re solving their problems.
Consider franchising
Franchising is an extremely interesting business idea for many because it takes a lot of variables out of the equation. You’ll be able to use the branding, the business model, the expertise, and the intellectual property of another company, and all you need is a location and funding.
As long as you’re confident in the research that you’re doing (see step #2 below) then franchising can be an excellent idea. Ever looked at a roadside lot and thought, “This’d be a great spot for a gas station or supermarket?” Well, do the research, see if there are any other gas stations or supermarkets in the area, ask locals where they top up or shop, and see which of the different brands fit the area best.
2. Research the Market
You’ve already got a leg up on this by thinking about (and even talking to) your target consumers as well as studying the competition. However, market research is a much bigger subject than just that, and it’s also crucial to the success of any business. Look at the millions of failed entrepreneurs who’ve had good ideas, but just didn’t understand the market for their products.
People love ice cream, right?
So, setting up an ice cream shop next to a park feels like a no-brainer. The thing is, you still need to know if that park actually gets foot traffic, or if it’s full of kids in the summer.
And do the kids who play there get pocket money, or are their parents actually willing to spend on ice cream regularly? And are there any other ice cream places nearby, that people already visit habitually?
These are the kinds of questions you need to ask yourself. Usually, you’ll want to begin your market research by doing primary and secondary research.
Secondary research looks at data from different sources, such as web analytics, while primary research deals directly with potential customers and includes everything from one-on-one interviews to surveys and questionnaires.
In order to take your research even further, it’s worth looking at different research techniques such as target personas and SWOT analyses, and applying them to your own nascent business as well as the competitors in the market.
This can help you to better define the path you’re on as you start your business, and better position yourself in the market alongside the other brands out there.
3. Create a Business Plan
When starting off, every business needs a business plan. We mentioned motivation and goals previously, and the same sort of logic is going to apply here. With a business plan, you’re going to draw up a formal roadmap for your company and define various things about it.
A business plan is also going to give people a reason to buy into your company, whether literally in the case of investors or figuratively in the case of any early hires you make.
Here are the sections that your business plan will need...
Executive summary
An executive summary gives anyone who reads your business plan a clear, concise summation of what your business is all about. It'll have subsections detailing what problem you’re going to solve, what your business idea is, what milestones you are aiming to hit, as well as the highlights of all the other different sections of the plan. These will include your target customer profile, team makeup, and more.
Company description
We’ve already mentioned branding, and all of that information needs to go into your business plan. It’s also a big consideration when it comes to grabbing a web domain—search for and claim your domain first before finalizing branding and committing it to your business plan.
Mission and goal statement
Your company’s vision, mission, and goals also need to go into your business plan. All successful companies do this well. It’s worth searching for the vision and mission statements of some well-known companies so you can take inspiration for your own.
Company structure
We’ll look at how to set up a business structure later on, but once you’ve planned out a structure you’ll want to detail it in your business plan. That way, readers can understand your team makeup and organizational structure at a glance.
Competitor and market analysis
Remember all of that market research and competitor analysis you did before getting to this step?
All of that needs to go into your business plan as well to give anyone who reads it a good grasp of what the business landscape you’re operating in looks like. If this section is lacking, a reader might assume that you haven’t done your research.
You can also add a background summary section to your plan that builds on all of your research, looking at trends that could affect your business or industry going forward.
Product or service details
With all of the background explained and the problem your company is looking to solve made clear, you now need to detail the product or service you’re going to bring to market.
You’ll need to go into some depth, and clearly outline your unique selling proposition (USP) to help readers understand how your product is different from what else is in the market and what niche it’s going to address.
Business model
The model of your business should be quite clear after the previous sections, but you should revisit it briefly and then add some information on how exactly you’re planning to scale, or serve more and more customers as demand rises while keeping expenses down.
- Most Popular Online Business Models Used By Successful Entrepreneurs
- Do you need a business degree to start a business? The truth about higher education
Marketing plan
Your marketing plan also makes up an important part of your business plan because it’ll encompass quite a lot of the time and money you’ll be spending.
After all, without any marketing at all you might struggle to kick on and achieve your goals, unless you’re starting a business in order to solve a very particular problem and already have the connections you need to get you the gig. A lot of consultants start off like this, but just about every other business needs a good marketing plan.
Financial plan
You’ll also need to spend plenty of time making sure your financial plan is up to scratch, especially if you’re looking to pitch investors or bring team members in quickly.
Your finances will play a big role in convincing them, and getting a handle on your projected cash flows is crucial for making good operating decisions going forward. For the best possible financial plan, make sure to include a projected income statement, balance sheet, and cash flow statement going out to five years if possible.
It’s also wise to consider an exit strategy at this stage. While you wouldn’t include it in your business plan, it’s a good idea to spend a little time considering what you might do in case you decide that you’ve had enough for whatever reason.
Many businesses are sold on to other parties, often at a profit (which could even be the goal of your business) and some are even passed on to friends and family. Others are liquidated, raising as much cash as possible from the business’ assets.
4. Get Your Finances in Order
Some businesses can be started and run on a shoestring budget, but that’s not always the case.
Consider a traditional business model selling a physical product. Assuming that you’re coming in with knowledge and expertise, you’ll still need a location to run your business, equipment to manufacture your products, space to store raw materials as well as finished goods, and money to spend on advertising the fact that you’ve got stuff for sale.
All of this costs money, and starting a business generally requires capital. Many entrepreneurs save their own money to start business, others borrow, some sell an initial stake of their company to wealthy investors, and plenty seek out business grants. Today, there are other options on offer too such as crowdfunding.
The point is, it’s very likely that you’ll need a certain amount of money to get started and then tide you through until your business becomes self-sustaining. That’s where a break-even analysis comes in, showing you how much revenue you need in order to break even.
Here’s how you calculate your break-even point:
Step 1: Calculate your fixed costs. These are going to be costs that don’t change, such as the salaries of full-time employees or monthly rent you pay for your manufacturing facility.
Step 2: Calculate variable costs. These depend on how much you’re going to be producing, so you’re looking at things like the power consumed by machines or cost of raw materials.
Step 3: Now, take your fixed costs, and divide them by the amount you earn per unit of product less variable costs. So, the formula looks like this:
What this formula gives you is the number of units of your product you need to sell in order to break even. This should now tie into your marketing projections and market research, and you should be able to figure out how many sales you make at a given price in order to break even, and whether that’s realistic.
To simplify this with an example, let’s say that you’re running a hot dog stand, renting a small location at the corner of a lot.
Rent’s $1000, you sell a hot dog for $5, and ingredients cost $3. To break even, you’ll need to sell $1000/($5-$3) or 500 hot dogs. Sell more, and you’re in profit.
Secondly, this analysis can help you make pricing decisions. The higher you can price your products, the fewer you need to sell in order to break even. Using that same example, hiking the price of your hot dogs up to $7 gives a break even point of 250 hot dogs—but this comes at the risk of pricing many customers out.
However, you should bear in mind the limitations of a break-even analysis—primarily, the fact that it assumes that fixed and variable costs stay the same. This isn’t true. Variable costs can change quickly, especially in a high-inflation environment, and fixed costs can also go up via rent alterations, tax regime changes, and giving your employees raises.
Beyond break-even and funding, it’s also important to control your expenses right from the start, since every bit of cash saved early on gives you a few days, weeks, or even months in terms of stretching your starting capital out.
5. Decide on a Business Structure
Another extremely important consideration as you start your business is what sort of legal structure or entity you want it to be. Your decision here is going to be a big one, and the main reason to consider a different sort of structure is personal liability—some business structures remove personal liability, ensuring that your personal financial well-being isn’t affected if something goes drastically wrong with your business.
Where you are in the world also might factor into your decision here, and while the types of structure and general characteristics we’ll discuss are pretty common and easily managed in just about any country, the procedures and benefits may differ.
So, here are the five main types of business structure you can use for your business:
- 👨💼Sole proprietorship. If you just start your business up without doing any paperwork or registration, such as by starting a YouTube channel and getting platform payments for example, you’re essentially a sole proprietorship. The advantage here is that you don’t need to do very much in terms of filing paperwork or consulting lawyers, but you are fully liable for any sort of debts your business may incur. This structure is fine for a side hustle, but once it starts to pull in some cash, consider switching to another structure.
- 🤝Partnership. Partnerships are like sole proprietorships, except that the personal liability is shared between yourself and whoever else you decide to partner up with—usually one other person, or two.
- 👔Limited liability company (LLC). This is a great option for businesses since it grants a lot of legal protection to yourself as the owner, but with the freedom and flexibility to operate the business however you want to just like a sole proprietorship. LLC Simplified: A Step-by-Step Guide for Entrepreneurs
- 🖥️Limited liability partnership (LLP). This one is to a partnership what the LLC is to a sole prop—it’s got liability protection for multiple owners rather than just the one. There’s actually no limit to the number of partners an LLP can have, but all of them are required to actively take part in the business, and they’re also personally liable in the case of malpractice claims against the business. Law firms usually use this structure.
- ✍️Corporation. This structure offers the same sort of liability protection for owners as an LLC does, and they can have an unlimited number of shareholders. However, taxation can be an issue, and you’ll need to be careful here—if you’re looking to pick up venture funding you’re going to be taxed as a C-corp, but if not you’re probably looking at S-corp status which offers pass-through taxation.
6. Register Your Business
Once you’ve decided on the right company structure for your business, it’s time to register it!
Your starting point is to check with whatever entity is in charge of commerce in your jurisdiction, so it might be a chamber of commerce or your state’s business agency. You’ll probably also have to choose a registered business agent or representative to accept legal documents on your business’ behalf.
If everything goes well and you pay your filing fee, you should receive a certificate from your state allowing you to apply for the licensing and permits that you’ll need, as well as a tax identification number. Oh, and you’ll need this to open a business bank account, too, so don't lose it!
The next step is to apply for an Employer Identification Number if you’re in the US. This is a hard requirement unless you’re a sole proprietorship with no employees. Luckily, it’s a simple process, and you should be able to apply for it and receive yours within minutes on the website of the Internal Revenue Service (IRS).
The last major piece of red tape to take care of is to consult your local government offices as well as your legal representative to see what local, state, and federal permits and licenses you need to operate your business.
The type of business you want to run and the nature of products you want to sell will naturally play a big role in what sort of licenses or permits you need.
Before completing your registration, keep your branding and business name in mind. You’ll have to register your company using its name, but your branding can actually differ from the legal name of your business. This is called DBA or “doing business as”. So, your business could be something like Gary Jones Enterprises LLC, doing business as “Gary’s Gardens”.
7. Start Building Out Your Team
Many entrepreneurs start off with a small business idea that they can run themselves, using a combination of software options taking care of functions such as accounting that they may not want to take care of themselves. So, if you want to keep your business a solopreneur operation for now, skip ahead.
Some businesses, especially those that are a bit more ambitious in scope or borne of a meeting of minds, may choose to start things off with a team of, if not employees, founding members.
If your business idea is a collaborative effort, you’ll want to discuss how to divvy up responsibilities and areas of purview with your partners—clear communication and even putting things in writing at this stage can help you dodge various pitfalls later on down the line.
If the business is your idea but you recognize the fact that you need other people on board in order to get your business off the ground, you’re off to a great start.
Understanding your own abilities, competencies and weaknesses is critical because you can then look for support in those particular areas. Fill in the gaps, and find a person or people who can do the stuff that you can’t.
Also consider the personalities of the people you’re bringing in. The right business partner for you is someone who can be a sounding board for ideas, is strong in areas that you aren’t, and is a visionary if you’re a doer or a doer if you’re a visionary.
Once you find the right person or persons to work with, it’s all about aligning goals, building trust, and then communicating effectively as you go.
8. Acquire Your Business Vendors
We mentioned using software to streamline processes briefly already, but that’s something that deserves a lot of elaboration.
Thanks to the internet and global connectivity, it’s possible to take care of various business processes using the online systems offered by different companies.
Take payments, for example. We gave the example of a hot dog stand previously. That sort of business works fine with cash, and a simple P2P online payment solution like PayPal or Venmo could give you even more sales from people who prefer going cashless or just aren’t carrying spare change on that given day.
For businesses that might be a little more complex or nuanced than a humble hot dog stand, point of sale (POS) payment systems or online checkout may not just be desired but necessary.
So, you’ll need to look for the right provider of systems like these, letting you make sales with the utmost ease and convenience. Especially with online checkouts, you’ll want to make sure that your customers aren’t distracted or put off by anything—cart abandonment can be a real issue. This is something a good payment provider can help with.
You’ll also want to look for vendors to take care of functions like accounting, human resources, order processing, and even fulfillment. If you’re going into some form of ecommerce, the best ecommerce platforms will take care of tons of functions for you, allowing you to focus on your product and marketing.
9. Implement Your Business Systems
Once you’ve got all of your vendors in place, that’s the back end of your business taken care of. Now, you’ll need to sort out the front end and the core processes and systems of your business.
Now, what exactly you’ll need to do will change depending on the type of business you want to run. Gary’s Gardens will probably entail a lot of different things than a hot dog stand would, and they’re both a world removed from something like selling online courses or other digital products.
If you’re running a traditional manufacturing business, you’ll need to design a layout for your production processes, acquire and install machinery, sign on logistics partners, and get your fulfillment systems in place.
With ecommerce, you’re probably focused totally on the fulfillment side of things. You’ll have to sign on with a production company to get the manufacturing or assembly done for you, but you’re essentially acting as the front office in business models like dropshipping.
With digital product ecommerce, fulfillment is different and, arguably, a lot simpler.
There are still things to think about such as DRM for digital products like courses, but generally speaking digital products just need to be delivered electronically once purchased or subscribed to. This process is a lot easier than setting up a logistics chain from an industrial facility in one country all the way to the customer’s doorstep in another.
10. Start Marketing
Even before launching your business, you’ll want to start setting the wheels in motion on the marketing front.
Every industry does this—think movie trailers and the many flicks that you first learned of from hearing the voice of someone like Don LaFontaine (In a World…) or Jon Bailey.
By promoting your brand and products prior to launch, you can give yourself a leg up in terms of getting product off the shelves. Starting a business and seeing your revenue sit at $0 for hours or even days after launch just wouldn’t do.
You want people talking about your brand and ready to buy your stuff even before you hit the market.
Today, the most economical and arguably also most effective way to market your brand and your products is via social media. There are tons of platforms to choose from, and you can hand-pick which ones you use based on your target audience.
As an example, you might use Facebook to reach older folks, or Reddit to find niche markets.
Beyond social media, you’ll also want to invest in digital assets such as a logo and your company’s website. In addition to those necessities, newsletter and email marketing can help you secure a customer base and keep in regular touch with them, ensuring that they’re ready for your products and services to hit the store.
What’s Next? Growing Your Business After Launch
Once you’ve completed all of the above steps and your business is up and running, your job’s not done.
In fact, it might even feel to you like your job’s never done—the life of the entrepreneur can be intense, and it feels like there are never enough hours in a day.
However, your new business still needs plenty of attention. It can take a while before you’re breaking even, and while getting to that point can take a whole load off (it’s never fun watching your bank account dwindle as costs continue to outnumber revenues) just breaking even probably wasn’t your business goal.
Even if it was, and your own CEO salary is part of those expenses, life isn’t exactly getting cheaper, and the salary you’re paying yourself is going to have to go up just to maintain your current standard of living.
So, scaling your business is the next objective.
Again, what sort of business you’re running is going to dictate exactly how hard it is to scale, and how you go about it. Let’s go back to our hot dog stand example. Scaling might mean hiring an employee and buying some gear to set up another stand at a similar location, or it might mean opening a shop and expanding your menu now that you have a loyal customer base.
A manufacturing business can be hard to scale—your location and equipment will generally define your total production capacity, and even if you have the demand for it, expanding production is often a huge expense. We’re talking about a second plant or an expansion to your existing one, buying more machines, and so on.
Alternatively, you could start up a night or weekend shift, but those options might come at a higher cost per additional unit production thanks to overtime or increased pay rates for those irregular shifts.
On the other hand, digital product businesses can be the easiest to scale and grow. Selling eBooks, for example? It’ll cost you absolutely nothing to sell more “copies” to customers.
The same thing goes for online courses, or subscriptions to your paid community, and so on. Even online tutoring can be scaled fairly easily, via hiring an employee (even someone from straight out of your student community, or a community mod) and training them to execute your methods.
For some business owners, simply adopting a useful piece of software or online can help them scale by eliminating costly and time-consuming manual functions.
If you’re running a membership business and managing members via a spreadsheet, for instance, switching to a full-featured membership platform can free you up to focus on growing your business.
Turn Your Business Idea into Reality with Whop
Starting a business is no small feat, but it doesn’t have to be overwhelming. You now have the steps laid out, but turning that vision into something profitable requires the right tools and support.
That's where Whop comes in.
With Whop's comprehensive suite, you can get any business off the ground! Seamlessly manage sales, payments, community engagements and more—all in your whop dashboard.
You can even find a broad selection of communities focused on different niches and business models, allowing you to connect and share knowledge and expertise with others on the same journey. You’ll also find experts there who’ve started businesses in various areas, letting you learn all of the ins and outs of navigating the business landscape in your state.
If you do decide to go the digital route, selling on Whop is the way to go—it's unmatched when it comes to online businesses.
Don't wait. Getting started with Whop is free, and in as little as 10 minutes, you can set up your whop, upload your digital products, and start selling.
FAQs
How to start a small business with no money?
Business owners can get funding from a variety of sources such as grants, angel investors, venture capitalists, crowdfunding, or even bank loans. Make sure you check with your local business authority to see what funding options may be available to you.
What’s the best business to start?
Digital products, as we’ve referenced a few times, have a lot of advantages—they’re easy to create, sell, fulfill, and scale. That’s one reason that the creator economy is growing, and showing no signs of stopping. It’s also really easy to get started as a creator of digital goods, all you need is inspiration for what to sell.
How to start a dropshipping business?
To start a dropshipping business, you need to identify with your customers and find a type of product that works with them. Then it’s all about finding a supplier and signing on with them to get your products out there. Here’s a full guide to get you started with your dropshipping business.
How much does it cost to start a business?
It can cost anywhere from nothing to millions of dollars to start a business, depending on what the nature and scope of it is. A shipbuilding company might set you back a whole lot of zeros compared to, say, selling handmade pottery from your garage or, even cheaper, creating digital products.
How to start a cleaning business?
To start a cleaning business, it’s often advisable to set up a LLC or corporation thanks to the sensitivity and liability aspect of the business—people will be letting you or your team into their homes or businesses, after all. Then, choose your niche, develop your pricing plans, and make sure you budget for things like cleaning gear and transport.
What’s the most profitable business to start?
Any business can be highly profitable if you do it well and secure some clear competitive or even absolute advantages for yourself. That being said, as a general rule, businesses that focus on premium products tend to be more profitable especially given that you’ll need to grow your business to a certain point in order to profit from quantity. Also, digital products are extremely profitable because of their ability to be scaled.
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