Running a business can have a powerful impact on your life and the lives of those around you. But before you can run a business, you need to learn how to start a business. There’s never a specific right time to start a business. Learning how to own a business is like starting a relationship. You should start a business when you have the time and attention to commit to it. However, there’s no problem with starting a side business while you are still working another job.
Deciding to start your own business can seem like a daunting prospect if you’ve never done it before. Luckily, plenty of other entrepreneurs have, and you can benefit through the wisdom they gleaned from their successes—and their mistakes.
These 12 time-tested steps on how to start a business—whether it’s your first or your 10th—will help you with everything from finding and validating your money-making idea to figuring out your shipping strategy to finally launching your product or service.
Finding a business idea is something you can approach systematically by relying on time-tested approaches that have worked for other entrepreneurs. No matter whether you're looking to start a low-investment business on the side or you'd prefer to go all in on your idea, the best way to find a product to sell includes strategies like:
Mining your personal interests. What do you like to do in your spare time? Are there products you can sell that relate to your hobbies or that would solve a common frustration you have?
Remember, all you need is one idea to get started. Many successful businesses launched with a signature product and expanded into complementary goods from there.
Validating your business might sound difficult, but it’s really just a matter of testing whether customers are willing to pay for your product before you sink too much time and money into it. It's important to validate your idea no matter what type of business you’re starting.
There are plenty of ways to validate your business, from the simple to the complex. Here are some tactical examples that can help you figure out how to calculate market demand before getting in too deep.
There are other ways to validate your product ideas but, when in doubt, start selling as quickly as possible. Learning from direct customer feedback and understanding how your products are being used is invaluable when learning how to start a business from scratch and growing it.
Take PopSockets, a now-ubiquitous way to confidently hold a smartphone in one hand. Initially, David Barnett designed PopSockets as a way to manage headphone cords. It wasn’t until he saw students in his class using their PopSockets to get a better grip on their phone that he realized the unplanned value his customers saw in the product. That insight helped PopSockets sell more than 35 million units.
Work on finding a name for your business that makes it clear what you do, that’s short and memorable, and that isn’t already in use in your industry. This isn’t an easy task, but it’s one that’s achievable with a bit of effort and imagination.
Name generators can help you come up with a list of unique ideas, and there are also plenty of time-tested naming best practices to lean on for direction.
A strong name will usually have a few characteristics:
Short and simple. You want customers to be able to quickly remember your name, and the best way to do that is to avoid a name that’s too long. One or two words is ideal, although three to four short words can also work if they create a memorable phrase.
Different. If your market research shows that everyone in your industry seems to have similar names or relies on similar elements, it can be helpful to avoid them in order to come up with a name that really stands out.
Original. Beyond just avoiding similar names, you’ll need to make sure your business name isn’t in use by a competitor already. To do that, run a free trademark search in the countries you’ll be doing business in, and make sure to check Google and social media sites, too. (The same goes for URLs, so do a domain name search before you register anything.) Even if someone hasn’t registered a trademark, in many jurisdictions they can legally challenge your use of a name they’ve been using to do business in the same industry. If you’re unsure, it’s best to consult independent legal counsel for advice specific to your situation.
Writing a business plan helps validate and formalize your idea and can streamline the business-creation process by getting you to sit down and think things through methodically.
A classic quotation that’s especially applicable to the business plan process is, “Plans are worthless, but planning is everything.” Many entrepreneurs say they rarely look at their plan once they’ve launched—but they’ll also tell you there’s value in thinking through and researching your idea while creating a plan.
If you want to learn how to start a company, it’s critical you learn to write a business plan. The following video can help you get there.
https://youtu.be/lZi4A9pyJb4
When creating your plan, make sure to pay extra attention to the competitive analysis and SWOT analysis sections. While nothing can replace validating your idea by confirming that people will pay for it, the research involved in completing these sections can be further proof you’re on the right track.
The shared goal of any business is to make money, which means cash flow management is an integral part of learning how to start a business. You’ll need to understand some basics to get started and scale that knowledge as you grow.
There are plenty of businesses you can start with only a small startup cost, but others will require money for inventory, equipment, or physical space. A clear view of your total investment—before you spend a cent—is a must for helping to make important projections, like when you’ll break even.
If those calculations show you’ll need more funding than you can afford to spend out of pocket, you can look at options like a small business loan or a crowdfunding campaign. Bookkeeping needs to be one of your primary financial tasks as soon as you’re ready to start making purchases for your business. Accurate records of your income and expenses will help you keep an eye on cash flow and make for a smooth transition to working with an accountant or bookkeeper later on.
To make the process even easier, consider opening a business bank account and obtaining a business credit card. Keeping your personal and professional finances separate makes doing your business taxes much simpler and can help you automate some of the financial steps to starting a business as well.
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You’ve done the legwork, and you understand the financials behind how to start a business. Now it’s time to dig deep into the product or service you’d like to offer. For a product-driven business developing your product could mean taking one of three general approaches:
Creating your own product. Whether you’re making items by hand, or sourcing an original product from a manufacturer, developing your own product to sell can help you stand out in the market.
Customizing an existing product. With print-on-demand options you can add your unique designs and ideas to products including t-shirts, leggings, towels, backpacks, and more.
As you develop your product, keep your total costs in mind when figuring out your pricing. While your product’s price is not solely driven by costs—and there are many factors that influence pricing strategy—it’s important to price your product profitably.
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Your business structure influences key parts of your business, from taxes to operations to your personal liability. Choosing the right structure is about balancing the legal and financial protections you need with the flexibility offered by different options. It’s an important decision and it’s one you should consider carefully before you launch your business.
Business structures vary based on your country and area, but two common types—that may go by different names in your country—are sole proprietorship and incorporation. A sole proprietorship is great if you’re the only person involved in the business and is usually the lowest-effort structure to pursue, but it leaves you personally liable for the business and its activities. You can hire employees as a sole proprietor but you'll need an employer identification number to do so, which means registering your business.
On the other hand, if you opt for a more formal structure, like a corporation, it’s easier to involve multiple owners and you’re not personally liable for the business. At the same time, there’s more paperwork and steps involved in starting and maintaining a corporation.
When it comes to understanding how to make business structures, there are a few factors you’ll need to consider:
An accountant or lawyer can be helpful in evaluating the different options available in your area and with the process of setting up your business.
Once you understand how to start up a business, look into what licenses and government regulations you need to operate legally. No one wants to end up in legal trouble. Your business is subject to the laws governing businesses in your area, as well as laws and regulations specific to your industry. For instance, a food service business needs to follow specific licensing and regulations for handling what it sells, but it also has to pay attention to the legalities of its marketing efforts and to trademark and copyright laws.
With so much to know, and a lot of it specific to your location and industry, it’s worth consulting with a lawyer to get advice before you launch your business. Investing time and money up front to obtain legal advice can save you from considerable headaches down the road.
When learning how to start your own business, it’s important to understand the value of good software. One of the best ways to reduce the heavy lifting involved in running a business, and to set yourself up for future success, is choosing software that can help you automate or streamline the things you need to do.
Often, when you choose the right software systems, you’ll be able to set them up once and have them run efficiently with little ongoing work. Consider looking into software to help you manage the following:
Your business plan will help guide what kind of space you need for your business. If you’re selling print-on-demand t-shirts, you may only need to find space in your home for a small workspace, a desk, and a laptop. On the other hand, if your business requires in-person retail space, you’ll need to find a place to rent.
To help narrow down what you need from your business location, consider these questions:
It’s possible you’ll be able to run your business from a space you already have available, especially if you don’t plan to sell in-person. If that’s the case, here are some home-office design ideas to help you create an effective workspace while you get your business off the ground.
Now that you know how to open your own business, it’s time to dive into building your team.
How much work will you need to do and what skills will be required to launch your business? These are fundamental questions you’ll need to answer, because they’ll guide both your timeline and your level of investment in your launch.
If you plan to do all of the work yourself, you’re limited by the time you have available to invest. If you plan on hiring help, you’ll need to account for those costs—as well as the time involved in finding and onboarding freelancers or employees.
Here’s an overview of the basic skills you’ll need to learn, know, or hire as you launch:
There are many design decisions that need to be made as you learn how to own a business, from designing a logo to choosing your brand’s colors. Here are a few key ones to focus on:
If a DIY approach to setting up your store is too far outside your area of expertise, you can find professional designers by asking for referrals from other business owners or searching for a Shopify Expert.
Great photos are essential to your business, especially if you’re selling online, but that doesn’t necessarily mean you can’t DIY your product photography.
Marketing is an integral part of understanding how to start your own business and can require multiple skill sets. Start by deciding which marketing activities will have the biggest impact for your new business, and use your plans to make a list of the skills you’ll need to execute them. For example, running paid ads is a much different skill set than taking lifestyle photos to build your Instagram following.
Research and understand some of the most common promotional tactics used in your industry, and make sure you have the skills required to implement them.
One key to understanding how to run a successful business is operating with a smart shipping strategy. Once products are ordered, how will they get from Point A to Point B? Make sure you have a shipping strategy in place that covers key details like:
Whatever your shipping strategy, Shopify Shipping is here to help with negotiated rates with USPS, UPS, and DHL in the US and Canada Post in Canada.
If you don’t have the time or skill to DIY everything you need for your business, hire help. You can find a virtual assistant for ongoing, routine tasks or work with an expert for more involved projects, like creating your website or your marketing plan.
Once you have a good understanding of what needs to happen and who will be completing the work, it’s time to add a bit of project management to make your life easier. Consider using a time management tool like Trello or Asana to write down, assign, and track tasks. Time management tools are especially helpful for keeping teams on schedule, but don’t underestimate the value of structure for yourself as well.
At this point, you know everything there is about how to run a successful business. You’re ready to take the last and most exciting step: launching! The preparation you’ve already done has laid a solid foundation to support your launch, so you can focus on marketing activities and making your first sale. However, a plan of attack, especially as you’re trying to build traction, can help make your launch even more successful.
While every launch will be unique, there are some elements that can boost any business’ first few days of sales.
Leverage your network. Promote your store first and foremost on free channels that are already available to you, which includes your personal social media and your contacts list. Sending one-on-one emails asking for support, which can be as simple as a social share, can go a long way toward gaining traction.
Starting a business isn’t easy, but it also doesn’t have to be daunting. Whether you want to bring a product into the world to solve a problem you’re having, build a profitable business to be self-employed, create business opportunities for the people around you, or bring in some extra money every month, these steps on how to start a business can help you make your dreams a reality.
Now that you know how to open your own business, it’s time to get started.