You may have a small business idea in mind. But when it comes to executing and doing actual work, things can quickly turn overwhelming and confusing, especially for first-time entrepreneurs.
However, having the correct information and guidance can make all the difference. If you have a small business idea and seeking help getting started, this guide is for you.
In this post, we have discussed a 10-step guide that takes you through evaluating a business idea, conducting industry and audience research, building a business plan, to launching and marketing the business.
1. Evaluate your small business idea
Have you decided what you want to sell or what industry you want to enter?
If yes, doing quick research on existing companies in your industry will tell you what products or services current brand leaders are offering and what you can improve in them.
To stand out in a competition, you must deliver something that other companies don’t (or the same thing but cheaper and faster).
However, if you haven’t yet decided what your business should be about, asking these questions will help:
- What do you like doing?
- What are you good at?
- What do you don’t like doing?
- Can you think about something that makes people’s lives easier?
- What is something that you have always wanted to do but lacked resources?
These questions can help you spark the idea for your business. Once you have that, ensure measuring it against whether it is profitable or you are good at it.
You may have often heard people saying you should monetize what you love doing. This is essentially true. But they often miss two essential things: it needs to be profitable, and you should be good at it.
So, considering the profitability proficiency factor is vital when selecting and evaluating your business idea.
2. Research industry and target audience
Once you have evaluated your small business idea, it is time to conduct market and target audience research. This will help you clearly understand the business landscape you are entering and the customer base you are trying to reach.
When researching the industry, learn about ongoing trends and challenges, and opportunities these trends pose. Keeping an eye on the industry news will help you foresee these changes and adjust your business accordingly.
You would also want to understand the legal landscape of your industry. Research the regulations that may affect your industry and how you can comply with them. Failing to do this can land you in legal trouble. So it is vital to be well-versed in the legal area of your industry.
Every business landscape is rapidly changing. So it is crucial to be prepared to adapt your future business as required. Ensure your business is flexible enough to respond to any current or future change, whether technological, regulation, or consumer behavior.
Researching all these aspects will take some time. But it is worth spending because it will help you be in a better position to start a successful small business. So don’t be anxious to spend time researching your market and audience.
3. Build a business plan
Whether you want to start a small business from home or a large-scale industrial plant, planning your business before starting is vital to ensure it succeeds.
Writing down the whole roadmap on a paper is better than mental planning. It will help you outline your goals, strategies, and how you plan to achieve them.
The first step in creating a business plan is to set your business’s goals. List down your long and short-term goals and build strategies for achieving those goals.
Once you have your goal list, you have everything to create your business plan. Begin by writing an executive summary (a brief business overview of your company). Next, write down your business description, mission statement, and unique selling proposition.
Finally, you will detail the marketing and sales strategies that state how to reach your target market and what marketing medium to use. It should also include your sales goals and the tracking process for those goals.
Building a business plan may seem like a daunting task. But is a crucial step in starting a successful small business. A business plan created in the right way will provide you with more chances of success.
4. Understand the business finances
Starting any small business takes some cost, so you must think about covering those expenses. Do you have the funds to start your company? Or will you borrow some money? Before you jump into your business, it is better to find out how much your startup costs will be.
A defined view of your total investment can help you make crucial predictions, like when you break even (reaching a point where income will be the same as your costs).
To determine this, list down all the physical supplies you need, estimate the cost of any services you will require, determine the cost of any license or permits required to operate, and calculate the cost of office space or other real estates. If you have hired employees, you would also want to add their payroll and benefits expenses.
Businesses may take years to turn a profit. So it is better to overestimate startup costs and keep aside over-estimated funds than inadequate. Experts suggest having enough funds that cover at least six months of expenses.
5. Choose the business structure
Before registering a company, you need to decide the structure of your business. Your business structure can legally affect everything from how you file your taxes to your personal liability if something goes wrong.
Here are common business structures and what they mean:
- Sole proprietorship: Solely owns a business and is responsible for all debts and obligations.
- Partnership: As its name suggests, two or more people run the business in partnership and are held personally liable as business owners.
- Limited Liability Company (LLC): Most common structure for small businesses. This hybrid structure can have legal protections for corporations while allowing the tax benefits of a partnership.
- Corporation: A company with its own legal identity separate from its owners. Corporation firms can own properties, assume liabilities, pay taxes, enter contracts, sue, or get sued like other individuals.
6. Register your business and get licenses and permits
Acquiring the necessary license and permits is essential before starting a small business. You have to register your business with federal, state, and local governments. And before registering, there are several documents that you must prepare.
Articles of Incorporation and operating agreements
Registering with the government is a must to become an officially recognized business entity. Corporation businesses need articles of incorporation documents, which include your business name, purpose, structure, stock details, and other information. Similarly, some LLCs require creating an operating agreement.
Doing business as (DBA)
You need to register your business name if you don’t have articles of incorporation or an operating agreement. This can be your legal name, a fictitious DBA name, or a company name. Moreover, you may also want to trademark your business name for extra legal protection.
Employer Identification Number (EIN)
After registering your business, you may need to get an Employee Identification Number. Generally, this is not required for sole proprietorship companies. But still, you may want to apply for one to keep your personal and business taxes separate or if you plan to hire someone in the future.
Income Tax Forms
You may also need to file certain forms to fulfill your federal and state income tax liabilities. What papers you need to fill out depends on your business structure. You can check the government’s official website to learn more about local tax obligations.
7. Apply for business insurance
Purchasing the right business insurance is crucial before starting your small business. Unforeseen incidents like property damage, theft, or even lawsuit filed by customers can be expensive. So be assured that you are protected against it.
Small businesses must invest in basic business plans, such as worker’s compensation and unemployment insurance if planning to hire workers in the future. You may also want to purchase General Liability (GL) insurance or a business owner’s policy. This insurance plan covers property damage, bodily injury, or personal injury to yourself or a third party.
You may also want professional liability insurance if you are a service-based business. It covers when you commit a mistake or ignore something you should have done while operating your business. Besides these, you may also need other types of coverage depending on your local and industry.
8. Invest in the right business tools
Business tools can help you run your company more smoothly and make your life easier. They assist in saving time, automating tasks, and making better decisions.
So, consider adding the following tools to your business:
- Accounting software: Accounting software can help you track your business income and expenses, create financial statements, and file taxes.
- Customer Relationship Management (CRM) software: CRM software helps you manage your customer relationships, track sales and marketing data, and automate tasks like customer service and follow-ups.
- Project management software: Project management software allows you to plan, execute, and monitor projects. It can also help manage employee tasks and allocate resources.
- Credit card processor: This machine will allow you to accept card payments from a customer.
- Virtual private network (VPN): VPNs offer a secure, private connection between your computer and the internet. This is crucial for companies that store and deals with customers’ sensitive data like credit card numbers.
9. Launch your business
Now comes the significant step for starting a small business – launch. All the hard work you have done till now has laid a good foundation for your business launch.
Although every launch is unique, these elements can help you boost sales for the first few days of your business.
Existing network
Try promoting your business on existing free channels like your personal social media accounts or contact list. Sending one-on-one messages or email asking for social share can help you get your business that initial traction.
Offering discount
Creating a rewarding discount scheme for early customers can help you get early traction, especially when your business is new and does not have reviews or social proof points.
Paid advertisements
Whether you are a small business or a large-scale corporation, paid ads can be one of the great ways to get in front of your ideal customers.
10. Market your business
Marketing is essential to reach out to your target audience. It often goes hand in hand with launching your small business or sometimes precedes it. With the prevalence of mobile and internet usage, digital marketing is a great way to gain that initial traction and boost market reach.
Here are some ways you can promote your business virtually:
Creating a website
Nowadays, a web presence is essential, even if you have a brick-and-mortar business. A website offers an authenticity factor and serves as a brand face on the web. Building a standard website is easy, and there are tools available that help you set up your site by yourself. But for a professional-looking website, I would suggest going for a web developer.
Optimize your website for search engines
There is a lot of traffic and competition on the internet nowadays. And if your industry is already quite popular, you will likely have tough competition on the website. In such a situation, ranking on search engines would be hard without optimizing your website for the latest SEO techniques. SEO seems easy, but it takes quite an effort. So, we suggest delegating this to a professional SEO service provider.
Leverage content marketing
Content marketing is one of the best ways to attract target customers to your website. By posting great blog posts and other forms of content that answer their questions, you can organically drive potential clients to your site and convert them into customers with the appropriate CTA.
Get listed in online directories
Many customers use online directories like Pen To Point, Yellow Pages, and White Pages South Africa to find local businesses. Including your business in such directories increases the chances of your potential customers finding your business on the web
Conclusion
Many of us have small business ideas, but realizing that idea can be challenging without proper knowledge. However, if you are willing to put in the effort and properly follow the steps given in this blog, you can start a small business and set it up for growth. You just need to execute on your idea.
Pen To Point encourages those entrepreneurs who want to take that first step. We are South Africa’s fastest-growing business listing platform that connects companies with their ideal clients.
Whether you are selling a product or service, we will help you get in front of your target audience. You just have to register your business on Pen To Point and wait for your customer to find you. So don’t delay. Go for it and register your company on Pen To Point now!