How to Start a Business: Step-By-Step Guide to Success

Starting a small business is a great way to achieve a work-life balance while pursuing your passions, but it can be challenging. The first year is often the most difficult, but if you're prepared and diligent, you'll be well on your way to success.

QuickBooks surveyed 965 experienced small business owners and solicited their insights for individuals embarking on their first business venture. To summarise, they recommended three steps to starting a business:

• Write a business plan
• Research the competition
• Find a mentor

Current small business owners say these three things can increase your chances of success. And yet, according to the survey, not all prospective business owners plan to follow this advice. Download the full report to find out what current business owners recommend for new business owners and what they wish they would have done differently.

We’re giving you a comprehensive starting a business checklist, which includes all the prep work you need to do before you register and the actions you need to take when registering.

Prep work:

1 . Define your vision

2 . Research your market opportunity

3 . Research your competition

4 . Write a business plan

5 . Perfect your sales pitch

6 . Understand your startup cost

7 . Plan your starting finances

8 . Develop your product

9 . Determine your business structure

10 . Investigate your legal requirements

Take action:

11 . Apply for permits and business licenses

12 . Create and register a business name

13 . Open a small business bank account

14 . Set up accounting and payment systems

15 . Keep your finances current

16 . Outsource essential functions early

17 . Learn how to hire and pay employees

18 . Find a business location

19 . Market your business and launch a website

20 . Explore business partnerships

21 . Drive customers to your business

22 . Don’t be afraid to ask questions

1. Define your vision

A business without a vision is like a ship without a sail. Defining your business vision sets everything else in motion. So before opening your business, first ask yourself why you want to open one.

Drafting a mission statement should serve as the foundation for your vision. In a few paragraphs, identify your company goals and the high-level strategies you’ll use to accomplish them.

When writing your vision, be as clear and concise as possible. Make sure you include a compelling and motivational message that inspires all involved in your business to work together toward the common goal. It should answer, at the most basic level, why you got into business and what drives your continued efforts.

2. Research your market opportunity

There’s a lot to consider when starting a new business, from developing your product to accounting and legal practices. That’s why you want to make sure you have a strong business opportunity before going too far.

Select a product or service

As there are so many different types of businesses in operation globally, you need to decide what product or service your business will sell, and how ‌you plan on standing out from competitors. In other words, what's your value proposition or unique selling point?

Validate your product idea

Before getting too into the weeds, it’s important to validate your product idea, this is done by:

• Conducting an experiment to generate leads
• Researching the market and competitors to see what’s trending around your product

• Pitching to your target market and analysing the responses you get

Also, you’d be wise to ask yourself these questions:

• Is this an original idea or an improvement on an existing product?
• Who are my potential customers?
• What is the need for this product?
• Is the market already saturated?

These are questions that you’ll need to seriously consider as you move into the next stage; defining your target market.

Define your target market

Who, exactly, will your business serve? Begin to identify your target market with demographics like age, gender, income, and location. Then, go deeper through personas or by creating a customer journey map.

Know your market size or opportunity

In the end, market research means quantifying the opportunity your product or service represents. Take time to figure out your potential customers' total addressable market (TAM). Estimating the current and future value of your business idea and setting reasonable goals can help you win a piece of the pie.

3. Research your competition

Competitor analysis is one of the key ingredients to a successful business. It not only lets you see what’s out there, but you can also identify opportunities in areas where your competition is lacking. This means finding the gaps, exploiting them, and reaping the benefits of your improvement on the market.

4. Write a business plan

Writing a business plan can feel like a daunting task. The good news is you’ve already done some of the work by tackling the steps above! Keep in mind that your first business plan isn’t final. Parts of it will likely change as you learn more about your market and grow your business. 

Take advantage of a business plan template to make the whole process easier. 

Some experts recommend starting with a business model canvas, a one-page document that covers the critical information you need to get started. This option can save you time and get you up and running faster.

Once you’ve been in business for a while or are ready to seek funding, you can build a more detailed plan, but your plan should cover:

• Your operating resources
• Your overall marketing plan
• Your cost and sales structure
• Your financial management and business growth

5. Perfect your sales pitch

If you plan on going after investors or financing for your business, you’ll want to create an elevator pitch.

An elevator pitch is three to four sentences that tell an investor:

• What your business does
• Why your business is unique
• How they will benefit
• How they can help your business through their investment

On top of crafting a unique, thought-provoking, and optimised pitch, you may also want to include a pitch deck. This is a basic slideshow that gives your elevator pitch imagery and usually includes statistics and more in-depth information surrounding your business.

6. Understand your new business costs

Even if you’re self-funded and have yet to work with angel investors, you still need to understand your new business costs. Start by mapping out all of your anticipated costs for the next year. Then, determine how much money you need to earn every month to stay in business (for example, your operating income and salary), and be mindful of costs like business taxes.

It can take time to build up your revenue, so it’s critical that you recognise costs and cash flow management trends early on.

7. Plan your starting finances

About 1 in 3 people who want to start a business admit that getting funding is one of their top three financial priorities. If you don’t have upfront cash, you don’t have to seek angel investments or venture capital. You can turn to other methods instead, like personal savings, crowdfunding, or loans.

Personal savings

One of the best ways to fund your business is using your own capital. Using your savings or personal assets can seem daunting, but there are some advantages to consider:

• You own your business outright
• You don’t have to give away ownership
• You eliminate the hassle of acquiring debt
• There’s no need to bring in additional partners

Crowdfunding

You’ve likely heard of ‌crowdfunding platforms like Kickstarter or Indiegogo. Crowdfunding is a popular route for many new business owners. You can use it to seek funds from many people rather than one major investor.

Microloans

These are small business loans, often less than $10,000, that you can use to get your business off the ground. You’ll have to research microloan options in your city, state, or country, as there are many different services to choose from.

Personal loans

If you have a good credit rating, you can take out a personal loan instead of a business loan. You can also borrow against a business credit card or a personal line of credit. Just be aware of long-term interest and tax implications.

Grants

Depending on your country, you may be eligible for grants, either from your government or private organisations. Again, you’ll have to do some research to find out what you qualify for and how to apply.

Friends and family

Last but not least, plenty of businesses get their start through the help of friends and family. Don’t be embarrassed to reach out! Take your pitches seriously by outlining all the work you’ve done through your canvas or business plan, and get them as excited about your new business idea as you are.

8. Develop your product

If you have’t already, you should think about moving into the research and development phase. Since you’ve already validated your product, now it’s time to get some prototypes out for the world to see. This can be done by creating a sample of your product to conduct market research with. During the development stage, don’t be afraid to try several times until you get a version (or several versions) of your product that you and your target market feel confident in.

9. Determine your business structure

Choose the legal business structure of your business entity. Are you better off as a sole owner or proprietor? Do you have a partner? Do you plan to incorporate your business?

If you’re not sure how to answer these questions, you’re not alone. 50% of prospective business owners say they’ll be figuring this out on their own, but seasoned business owners strongly recommend getting help choosing a business structure.

Each business structure option has its advantages, as well as associated tax reporting responsibilities and regulatory requirements. Research the laws and regulations in your country of origin to determine which business structure will work best for you. 

Let’s take a look at the four business structures common in all countries:

Sole proprietor or sole owner

This is a popular option for anyone who doesn’t have a lot of liabilities (for example, no employees or significant investments) when they start out. As your business grows, you may wish to change legal structures. Being a sole proprietor could be an excellent option for those with a small side hustle or day job.

Business partnership

If you’re going into business with a partner, then you will need to register as a business partnership or limited partnership. Expect to work with a lawyer and a tax professional to lay out your partnership type, terms, and tax implications.

Incorporated business

Some notable benefits of incorporating your business include tax breaks and liability protection. Due to upfront costs, many sole proprietors wait until they have earned enough funds and are at the right stage to incorporate.

If your business is a private limited company, corporation, or partnership, you’ll likely need to register your business with any country where you conduct business activities.

There are several other business structures to choose from, depending on where you live. Speak with an accountant or bookkeeper to determine which option best suits your needs.

Limited Liability Company (LLC)

An LLC is a U.S.-specific form of a private limited company, it may have a different name in other countries, like Private Limited Company (Ltd.), or Limited Liability Partnerships (LLP). Each country may also have different requirements for these types of business structures.

The LLC structure safeguards business owners, managers, and the LLC itself against certain types of personal liability. If you plan to operate from a brick-and-mortar location, personal liability is an important consideration. Should someone get injured on your property, you may not be held personally liable for the damages.

If your business is an LLC, corporation, or partnership, you’ll likely need to register your business with any country where you conduct business activities.

There are several other business structures to choose from, depending on which country you live in. Speak with an accountant or bookkeeper to determine which option best suits your needs.

10. Investigate your legal requirements

Complying with legal regulations is a top priority for current and prospective business owners, according to the QuickBooks survey. Before you start your business, consult a lawyer to ensure you’ve considered all the legal requirements. A reliable lawyer can help you resolve legal and contract disputes and give advice before you sign a new contract.

Here are some essential questions to ask your lawyer:

• Should I trade mark my company name or logo?
• Do I need patents, copyrights, or intellectual property protection?
• Can you create standard contracts for negotiating with other businesses and suppliers?
• How do I form a sole proprietorship, partnership, or corporation?
• What’s the process for sharing equity when seeking private investors?

Different laws apply to every type of business, product, or service, with every country having its own set of rules. Your local and federal government websites are an excellent place to begin your research about legal requirements.

You should also consult national consumer and privacy laws for collecting personal customer information.

11. Apply for permits and business licenses

Visit your government services or the small business association in your country to determine whether your business requires any national or local licenses and permits.

While you’re at it, check to see if you qualify for any tax deductions and credits. Many local governments design special credits to help small businesses grow faster.

You will also need an employer identification number (this identification number may be named different depending on the country where you are conducting business) if you plan to hire employees or open a business bank account. This will also serve as your tax ID so that you can pay federal, state, and local taxes.

Your accountant or bookkeeper can advise you on any other tax-related applications you may need to complete. Again, this process depends on where you live and the kindof business you’re operating.

12. Create and register a business name

After you’ve had a conversation with your accountant and lawyer, it’s time to register your “doing business as” name. The process differs slightly depending on where you are.

Seasoned business owners recommend consulting an expert to help you choose your business name, create your logo, and register your business. However, 76% of prospective business owners say they’ll be choosing their own name, and 53% will attempt to design their own logo.

You can change your name and logo down the road, but try to start with a name and brand that you can stick with. Before you register your business name, you may run a few options past an expert.

Here are a few things to keep in mind before finalising your choice of business name:

• Web-friendly naming: Keep your URL less than three words if possible.
• Consistency: Use the same name across the board.
• Unique but not hard to spell or pronounce: You don’t want customers guessing what your name says.

Once you’ve landed on a name you feel good about, make sure it’s available. The quickest way to find out is through an online search. Enter your desired name into Google and check social media platforms like Facebook, Instagram, LinkedIn, and Twitter.

Reference your government’s company search service to ensure another business isn’t using the name. If you plan to conduct business in multiple countries, check for the name’s availability in those countries as well.

You should register the name and ensure it’s valid before creating business cards, logos, websites, and other materials. Again, registration sites differ by region and country.

Finally, if you decide to register your name as a trade mark, you’ll need that at this point. Your lawyer can guide you through this process, but keep in mind that there are additional costs associated with every registration.

13. Open a small business bank account

A business bank account can help you track business expenses and take advantage of tax deductions and credits available to small business owners. You might consider opening a business bank account as soon as you start making business transactions. If you’re an LLC or corporation, you must have a separate bank account for company finances. A business credit card is also a good idea because it will help you to budget better and keep your personal and business expenses separate.

Arrange a meeting with a business banking specialist to determine which type of account is right for your business. Cross-reference the bank’s advice with your accountant to determine which savings bundles or special accounts will benefit you.

You may be planning an international business strategy and expecting to generate a high sales volume in those overseas markets. In this case, opening a bank account in the local market makes even more sense. You’ll save money on bank transfers and currency exchange rate fees.

Plus, establishing a financial presence by country will make it easier for your bookkeeper and accountant during tax season, as they’ll be able to see separate statements for country-specific revenue.

There are other benefits to opening a business bank account including:

• It opens the possibility of lines of credit
• Credit card availability
• Access to in-house loans
• Customer payments can go straight to your account

14. Set up accounting and payment systems

Current business owners say setting up financial systems is the first thing you should get help with when starting a new business. If your accounting system is set up correctly from the start—with future growth in mind—you’ll save yourself time and money in the long run.

Many small business owners outsource their accounting to a bookkeeper or chartered accountant. While that can save you a lot of time, you still need access to tools to help you review your finances month to month.

The top three financial processes current business owners say they wish they’d invested in sooner are expense tracking, inventory tracking, and invoicing. Since cash flow is critical in starting a business, don’t launch without a cash flow spreadsheet and a balance sheet. You might also consider accounting software that automates this process and can help you visualise the money coming in and going out.

Regardless of your choice, maintain a complete record of all of your finances in one place. Every level of business has legal and record-keeping tax obligations. Nailing down your bookkeeping from day one frees you up to work on growing your business.

15. Keep your finances current

For small business owners, tax time is all the time. Ultimately, small business owners claim tax breaks on their tax returns, but year-round tax planning is important to maximise tax benefits. In order to make the most of this tax season, keeping your finances current is imperative.

No matter how you file taxes, small business owners need to keep an accurate record of financial activities throughout the year. If you’re not quite sure where to start, consider working with a tax professional. If you’d prefer to do your taxes on your own, you might invest in tax preparation classes to help you get it right.

16. Outsource essential functions early

When launching a business, you may feel inclined to handle all tasks on your own in order to cut costs. However, dedicating time to tasks outside of your expertise can ultimately result in a greater loss of both time and money.

Delegate or outsource tasks that aren’t your area of expertise, like accounting, administrative work, or public relations. If you have the funds and legalities worked out, you can hire a few employees to share the workload.

In fact, new business owners plan to hire 10 employees and seven contractors on average within the next 12 months, according to the QuickBooks survey.

It might be tough at first to trust other people with your business. But if you hire great employees, you’ll question why you didn’t hire them sooner.

If money is tight, but you still need help, you can enlist contractors or freelancers. Managing your sanity is just as important as managing your time.

17. Learn how to hire and pay employees

If you decide to hire someone instead of outsourcing to a contractor, you’ll need to familiarise yourself with:

• Creating job postings
• Creating legal documents (NDAs, non-competes, etc.)
• Where to post your job opportunities
• Business taxes

You must withhold taxes from employee payroll payments. Speak with your accountant to ensure you meet all your tax responsibilities. Ask common payroll questions to understand the basics.

Digital payroll services offer both self-service and full-service options. Using payroll software can help you:

• Set up and track employee health insurance, retirement plans, deductions, and garnishments.
• Monitor employee payroll data and annual changes, like bonuses and salary bumps.
• Establish a digital process to pay taxes automatically.
• Add new employees to your payroll system automatically.
• Enable automatic online direct deposits, which transfer funds into your employees’ accounts worldwide.

Overall, payroll software can help you manage payroll effectively and better understand how to process payroll.

18. Find a business location

Around 25% of upcoming small businesses will have a completely remote workforce. However, most small businesses will continue to have a physical location for business operations in some capacity. If you’re preparing to open a brick-and-mortar food or retail business, picking the right location is extremely important.

As you scout locations, there are a few things you need to keep in mind:

• Online only: Many small business owners have gone totally virtual. If your business is online, you need to consider where you will host your site as well as the design and speed to handle web traffic.
• Demographics: Consider who your customers are and how they’ll interact with your location. Does your target demographic frequent this potential location? Make sure your location reflects the image you’re trying to project.
• Foot traffic: Before you sign a lease, monitor ‌foot traffic outside a potential location throughout the day. Is it tucked away, or does it see plenty of passersby? Does the location have suitable parking for your future customers? Is it accessible?
• Competition: Having competitors nearby isn’t always a bad thing. Either way, you’ll want to be aware of them before you decide on a location.
• Business community: Are there other businesses nearby? You may benefit from their foot traffic. Are there restaurants nearby? Your customers (and your employees) might enjoy a bite to eat after shopping at your store. Look for a location where you can benefit from other businesses—and they can benefit from you.
• History: Research the history of the location. If other businesses have tried and failed in a space, you might want to know why.

No matter what type of business you plan to start, make sure your location can meet your present and future needs. Look for adequate electrical wiring and utilities, space for your employees or any special equipment, and even zoning ordinances.

Finally, keep the cost in mind. Rent is a major monthly expense for many small businesses, and there may be other location-related expenses like business insurance, cleaning services, and parking fees.

19. Market your business and launch a website

New small business owners say building a business website is their top marketing priority. In an increasingly digital world, it’s a smart move. In fact, 28% of small businesses say they are selling more products or services online than last year. The majority of them are doing so as a direct result of the COVID-19 pandemic. And experts predict that this shift to e-commerce is here to stay.

Whether you run an online business or a brick-and-mortar location, you must include a website as part of your marketing strategy. Fortunately, you don’t have to spend a ton of money to set up your business for online sales. There are lots of easy-to-build and affordable website options.

A few things to think about are:

• Creating your website layout/theme
• Picking your colour scheme
• Hosting for your website
• Marketing for traffic

When you have spare time and the budget, you can start making accounts on social media to advertise your business and find new customers. Also, think about investing in digital marketing tools such as paid ads, reviews, and search engine optimisation. As your business grows, you can plan for a bigger and more successful digital marketing strategy.

20. Explore business partnerships

We discussed reasons to enter a partnership when you start your business, but we should also address partnering with other companies for collective growth. There are several ways to form partnerships, like using referrals or joint ventures.

Referrals and revenue share

Some work with partners to help them sell services in exchange for a commission or revenue share wherein one business gives a percentage of a sale. Revenue shares are common for small sales teams and business owners who want to expand without hiring more full-time employees.

With referrals, you might offer a commission to a partner who helps introduce and assist you in closing a prospective customer.

Revenue sharing is usually better for businesses that help a customer use their product or service better. For example, software suppliers have expert partners who might help a mutual customer use the software more effectively. As a result, the customer may spend more money with the software supplier. And the expert partner would get a percentage of sales based on agreeable terms.

Joint ventures

If you plan to build a tower for office space or make a movie, consider forming a joint venture with another business or group of companies.

Let’s say you have all the equipment and staff to film the story but want to add computer graphics. That’s where a partnership with another production company with those capabilities makes sense.

Cross-promotions

If two businesses have similar target customers, it often makes sense to partner on a cross-promotion.

Spend some time thinking about whether there are businesses in your community you can partner with. When approaching them:

• Be honest and clear about what you want and what’s in it for them.
• Be patient and willing to negotiate to ensure both parties are happy with the deal.
• Be ready to walk away if you can’t arrange a fair and mutually profitable opportunity.

Just like when you’re hiring employees, place trust at a premium. You can always ask their existing or past partners whether they were happy with a recent joint venture or cross-promotional experience.

21. Drive customers to your business

While creating a website can be made simple with plenty of online tools to assist you in your journey, driving customers to your business can be much trickier.

Depending on your type of business, you’ll need:

• Online ads: Ad placement on a popular website and social media
• Print advertising: Ad placement in a magazine or newspaper
• Networking opportunities: Attend business events in your community
• Referrals: Ask for referrals from your customers either through word of mouth or via their social media

Even with these tools, both time and commitment are required to build a strong brand reputation that provokes customer loyalty.

22. Don’t be afraid to ask questions

Asking for help may sometimes be a challenge, but don’t underestimate the power of utilising your network or teaming up with a mentor for help. Take advantage of your social and business circle of friends for better insight.