Everything You Need to Know About Starting a Small Business
In order to launch and build a successful business, it’s important to first understand how to start a small business.
While some of the steps to bring your small business idea to market will depend on the type of business, the industry you choose, and the products or services you will be providing, every business will need to follow these essential steps:
- Identify your business idea
- Research your idea
- Refine and test your idea
- Define your business model and business plan
- Set up your business
- Get your finances in order
- Choose a business location
- Build your website
- Find your customer base
- Prepare for challenges
Read on to learn more.
Identify Your Business Idea
When considering how to start a small business, it’s important to remember that a great business starts with a great idea. However, even in the ideation stage, there are several approaches you can consider.
When developing your small-business ideas, you can take something you’re passionate about—like a hobby—and turn it into a business. For example, if you love puzzles and care about quality and design, you might consider manufacturing your own brand of puzzles. If you love to bake, perhaps you have a dream to open your own bakery.
Another way to approach your small business idea is by solving a problem. Perhaps your area is growing in tourism but doesn’t have enough accommodations. If you have extra space at your home or can buy an investment property, this may be an opportunity for you to explore hospitality as a business venture.
Finding a need in your community is a fantastic place to start. You can also generate small-business ideas through brainstorming. Write down any idea that comes to mind—big or small—and refine your idea in the next phase.
No matter how your business idea comes to mind, remember to be realistic about the demand and scalability of your potential business.
Research Your Idea
The next step in how to start a small business is to do some market research and take a hard look at the demand for your business idea in order to ensure that it’s viable. It’s important to do this before you spend time and money developing your business.
Questions you should seek answers to during this phase include:
- Is there a need for this product or service?
- What is currently available in the market?
- How competitive is this industry, and who are my top competitors?
- What is needed to turn my business idea into a reality?
Conducting market research for your small business idea will be helpful when you begin writing your business plan.
Refine and Test Your Idea
Testing your idea is a crucial aspect of starting your business. You can provide your service to a few people and get valuable feedback on how it’s working.
If you are manufacturing a product, you can create a prototype and learn what works—and, just as importantly, what doesn’t. You can also find out how many potential customers might pay for your product or service. From there, you can refine your business idea.
Define Your Business Model and Business Plan
A business model is a strategic plan for how a company will make money. The model describes the way a business will take its product or services, offer them to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should cater to, and what revenue streams it may expect.
A business plan is a step-by-step guide that will help you in achieving your goals. It’s a foundational tool that helps to map out your plan for success and guides you through the stages of beginning and operating your business.
There is no right or wrong way to write a business plan—it simply needs to meet your needs and the needs of your business. It can cover anything from high-level overviews about various aspects of your business to more detailed information such as your operational plans and finances.
Topics you may consider including in your business plan:
- Executive summary
- Overview of the company and its objectives
- Market analysis
- Company organization
- Overview of services or products
- Marketing plan and sales strategy
- Logistics and operations
- Financial projections
You should think of your business plan as a living document, designed to be reviewed and adjusted over time.
Set Up Your Business
Next it’s time to set up your small business, which has several steps within this phase.
First, you will first want to choose a business name. It’s important to choose a business name that is available for use in Oregon, which you can check through the Oregon Secretary of State’s website. Businesses can also obtain a federal trademark, so it’s a good idea to search the U.S. Patent and Trademark Office (USPTO) for similar business names to yours.
Next, you will need to choose your business structure. Your business structure will influence your registration requirements, your tax responsibilities, and your personal liability. Choosing the right business structure will provide the right balance of legal protections and benefits.
Common business structures include:
- Sole proprietorship
- Limited liability company (LLC)
- C corporation (C corp)
- S corporation (S corp)
- Benefit corporation (B corp)
- Close corporation
- Nonprofit corporation
Once you have identified your business name and business structure, you can apply online for your business’s federal Employer Identification Number (EIN) through the IRS if applicable and register your business in Oregon. This will allow you to apply for the necessary business licenses and permits. Check to see if an EIN is required for your business.
Get Your Finances in Order
Being able to manage your finances well will be critical to the success of your small business. One way to get off to the right start is to ensure that you separate your personal and business expenses.
Open a separate business checking account, which can be used to receive payments and to pay for business-related expenses and overhead. LLCs, partnerships, and corporations are required by law to have a separate bank account for business. While sole proprietors are not legally required to have a separate account, it’s highly recommended, and your future self will thank you come tax season!
You may also want to consider opening a business credit card and will be required to do so if your business structure is a corporation or an LLC. Building credit is important for having the ability to secure future funding should you need it.
You’ll then need to develop a bookkeeping system and set up important processes, such as how you’ll get paid by your customers.
At this stage, consider your knowledge, skills, and abilities to:
- Keep accurate records
- Analyze timely financial reports
- Prepare sales forecasts and budgets
- Track and analyze key financial indicators
- Structure debt effectively
If you’re unsure about how to manage the day-to-day bookkeeping and accounting responsibilities for your business, you should know that the Oregon SBDC offers resources and ongoing classes for small business owners to get a handle on their finances and accounting basics, including the Small Business Management Program, which provides a combination of a classroom setting and one-on-one coaching to help make you and your business more successful.
Additionally, businesses will need to secure external business financing through a line of credit, a small business loan, or other means. The Oregon SBDC’s Capital Access Team can help you access the funding your business will need through specialized business advising.
Choose a Business Location
If you are planning to operate a brick-and-mortar business, choosing a business location is one of the most important decisions you will make before launch, because it will determine the taxes, zoning laws, and regulations your small business will be subject to.
Consider your business’s target market; your personal preferences; and the costs, benefits, and restrictions of different government agencies.
Costs that can vary significantly by location include:
- Standard salaries
- Minimum wages
- Property values
- Rental rates
- Business insurance rates
- Government licenses and fees
Additionally, local zoning ordinances, taxes, and government incentives will also vary.
Build Your Website
Regardless of what type of small business you’ll be operating, having a website as part of your online presence will be important in building your credibility with your customer base.
As you prepare to build your business website, the first step is to obtain a good domain name. That means finding a URL that is easy to spell, as short as possible, and memorable. Be sure to research the domain name to see if a similar web address already exists. Additionally, check with the USPTO to ensure that you haven’t included any registered trademarks.
Your website should clearly showcase your business products or services in a memorable and engaging way that drives results. Beautiful graphics that are compressed and optimized for fast loading, easily accessible calls to action (such as “Buy now” or “Call now” buttons), and an intuitive navigation system should all be considered as you create your site.
Implementing search engine optimization (SEO) practices to ensure that search engines index and rank your website will also help with your business’s visibility.
Find Your Customer Base
Now that the groundwork of how to start a small business has been laid out, it’s time to find your potential customers.
Before you can build your customer base, you will need to know who your ideal customers are. Develop a plan for acquiring customers by understanding how your typical customer would find a product or service like yours. This may include marketing strategies such as building an online presence on social media, using text or email marketing, paid media and advertising, and in-person networking opportunities.
It’s also helpful to research successful competitors to see where they advertise and what other strategies they use, as those may be beneficial for your own business efforts.
Prepare for Challenges
Successful business owners prepare for everything. When you’re learning how to start a small business, one thing to keep in mind is that there will always be unforeseen obstacles. The market and technology are constantly changing, and the most successful entrepreneurs are those who are flexible and willing to adapt to their customers’ needs.
As a new business owner, you may also learn that there are aspects of your business that you aren’t sure how to manage, like payroll, business taxes, hiring, or marketing. Don’t be afraid to ask for help! The Oregon SBDC is here to support entrepreneurs as they prepare to start and grow a successful business. One of the ways we do that is through our no-cost business advising that can be accessed at our 20 core service Centers across the state of Oregon.No matter the type of challenge you may be facing with opening your small business, the Oregon Small Business Development Center Network can help you turn your small business idea into a reality! Connect with your local SBDC to learn more at OregonSBDC.org.
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