Starting a business can be overwhelming. The moment you even mention the idea, it seems like everyone has an opinion and input. And there's so much to think about! Where do you start?
I know the feeling — I've been there. Starting a business is an exciting time, and being overwhelmed is rarely productive (at least for me!). To help you get more done during this time, I’ve put together my thoughts on how to approach things by giving you a checklist for starting a business.
We'll review the simple, yet sometimes time-consuming tasks involved in starting a business. Remember, this checklist isn't meant to be finished in an afternoon; it'll take some time, and every business owner moves at their own pace. Take things step-by-step so you can set up your business in a mindful way that's set up for success.
Ready? Let's dive in.
This may seem obvious, but the first step in our checklist for starting a business is defining what you want your business to be.
Go beyond your initial idea. Do you want to sell a specific kind of product? Do you want to provide a certain type of service? Regardless of which of the two you choose, your business will ideally bring value to your customers that no other business is offering.
Keep documentation of this idea. The odds are that it may change a bit over time, and it'll be helpful to track its progression to see how the company's grown. I recommend documenting everything you can along the way. Some notes may seem unimportant but can come in handy later on.
OK, so you know what it is you want to do. But who are you really doing it for?
Our customers are the most important component of the business because, well, without them, we wouldn't have a business. For my business, I knew that I would need to have an in-depth understanding of who my customers were so that I'd be better prepared to talk to them on their level and help them see the benefit of working with me.
The first thing I'd recommend is market research. And I know — you want to get to work, and the last thing you may want to do is research. But trust me, that market research has long-term benefits and is worth the upfront time investment.
"Market research" is basically a fancier way of saying research on your customers and their motivations. You want to understand the types of people who will be buying your product or service, what motivates them to work with you, and what companies they may already be doing business with. The Small Business Association (SBA) has great resources to get you started with your research.
Say you were visiting a friend in a new town, and they asked you to run an errand at the grocery store. You wouldn't just drive around until you found it, right? Of course not — you'd ask your friend for directions or plug the address into your GPS.
Starting a business without a business plan could end up having you running in circles and ultimately, getting you nowhere. But with a plan, you'll be able to set short- and long-term goals for your business, while having a tentative path for how to get from one point to another.
A business plan is also a great way to zoom out and see the bigger picture of how all the parts of your business will interact with one another and lead to your success. We have a FREE business plan template you can download here to get started.
Next, we recommend registering your business. The first thing you can do is get an Employer Identification Number (EIN) from the IRS.
Even if you don't have employees, unless you're filing as a sole proprietor (without employees), an EIN will come in handy during tax season. It also will make it easier for local customers to find you. Your state and local municipalities may have specific requirements for registering your business in your county or town, so be sure to check on your local .gov websites.
You probably incorporated a goal for expected revenue in your business plan, right? Well, once you make money — where are you going to keep it? Not all banks are created equal when it comes to handling small business's accounts. But fortunately, many banks offer discounts, funding options, and incentives for small business owners.
Deciding to use a small business bank means protecting your business in more ways than one: It can help you avoid an audit from the IRS, possibly save you money on tax deductions come tax season, help organize your administrative process (and thus reduce the chance of error), and more.
Keep in mind that many banks may require registration paperwork in order to open a business bank account — another reason why checklist item #4 is an important step.
Opening an account with a small business bank is just one thing you can do to protect your business. Another is to get business insurance coverage. You may assume that you don't need this type of protection right off the bat, but unfortunately, we can't always predict what will happen down the road.
Having general liability coverage could help to protect you if your property is damaged or stolen, or if a third party (e.g.,customer or vendor) has an accident. Professional liability coverage could help to protect you in case a customer claims that you were negligent while working for them.
You may not need both types of coverage, but having business insurance can help protect you financially. If for some reason your customer sues you, having business insurance can help cover legal costs. Or if you have to take legal action in the future, insurance could help cover those costs as well. It's smart to be proactive about getting business insurance. When it comes to being in legal hot water, it's not easy to get out if it's already boiling!
If you plan to have employees, it's also worth getting ahead of the curve and investing in workers compensation insurance. Workers comp can help protect you and your business's finances if an employee gets injured or becomes sick while working for you.
How much business insurance costs depends on what your business is and how a carrier determines your risk. You can compare insurance policy premiums by using our free quote comparison tool here. This way, you can get a good idea about what business insurance may cost you.
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I know it's confusing, but registering, getting licensed, and getting permits aren't necessarily the same thing. In some states, having a business license and professional license are the same, while in others, they're two separate types of licenses.
After you handle registration, check to see what business license requirements exist where you run your business, as well as permit requirements (which may apply if you work in agriculture or food service, for example).
We know this is a lot of information to sift through, so we've done most of the research about applying for a business license. You can find the business license requirements for your state here on Simply U. If you work as a contractor, you also may need a contractor's license — you can learn more about what you may need for a contractor license here.
Part of doing market research for your small business is learning where your potential customers are spending time online. And if they're online (which the majority of people are in this day and age), they may be expecting to look into your business online, too. People do their research; 72% of consumers will look up something first before actually going into a store.
What will a customer find if they're looking for you? Be sure to create a social media presence on at least one platform (e.g., Facebook, Twitter, Instagram, TikTok, etc.).
Another place a customer may find you (which you can point to via social media) is on your website. It may seem like a pain to create a website, but it's important to have an online presence where customers can get a better idea of what you do and why they should work with you. Remember, it doesn't have to be perfect to publish — you can improve it as you go.
With a solid online presence, now you're ready to work on actively targeting new customers. Remember how I talked about researching who your target customer is? Here's where those things come into play again.
Use your social media accounts and website to advertise your business, including any discounts or deals you're offering. Your online presence will play a big role in finding your customers from the get-go and moving forward.
Getting customers through your door isn't easy, so don't be afraid to use these channels to sell to potential customers on why they would benefit from working with you. Once you find your first customers, don't just sell your product or provide the service and stop communicating with them.
Put together a simple plan to keep your customers. Maybe this means that after a certain amount of time, you follow up via email or phone, or maybe it means getting in touch with customers to let them know about deals specific to them.
Phew. Deep breaths! All of this overwhelmed me when I got started with my business, but hopefully, breaking these tasks down into a checklist for starting a business has helped you view the process as more manageable.
In reality, the 9 steps above are just the beginning of your journey as a business owner. After all, it's a marathon! We're happy to be here every step of the way. One tool that can really help pave your path is the business plan we mentioned earlier on in the checklist. We have a FREE downloadable business plan template below that you can use to get started.
If you need information on growing or protecting your business, stop by Simply U for more content like this along your journey.
Writing your business plan doesn't have to be hard. Download our free template here and get started!
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.