The number of small businesses nationwide has reached 30.2 million, according to data from the U.S. Small Business Administration (SBA). This means that small business owners are key contributors to a healthy economy. But it’s important to note that not every business is successful.
What does it take to succeed in business? How can entrepreneurs looking to launch their big idea or professionals in pursuit of fulfilling their dreams of business ownership achieve these aims? Whether the goal is to achieve independence, follow a lifelong passion or launch a promising product or idea, there are crucial steps to starting a business.
The steps to starting a business can vary based on several factors, such as business type. While starting a business has its challenges, there are many advantages that make startups worth pursuing. An advanced degree like an online Master of Business Administration can prepare graduates with an understanding of strategic concepts and knowledge to build strong business foundations that help foster long-term success.
A person looking to launch a business should be clear on their venture’s purpose. They can start by asking themselves key questions. Why start a business? What problem is my business solving? What’s the market for the business? Armed with answers, a prospective business owner can then take the steps for starting a business outlined in this article.
Write Your Business Plan
A business plan serves as a road map and includes information on the way you intend to structure your business and how you will operate it. It covers long-term goals for the business as well. This information is valuable for potential investors and lenders.
A business plan format can vary. Some business owners prefer the traditional plan, which typically provides detailed information about all aspects of the business, from mission statement to finances. Other business owners prefer the lean business plan. It’s faster to write than a traditional plan because it only provides a high-level overview with minimal details — many are only a page. But key details of potential interest to investors may not be included in a lean business plan, so the owner may be asked for more information.
A lean business plan includes information like value proposition, infrastructure and finances. In contrast, a traditional business plan lays out more details, expanding on market analysis, marketing and sales information, and financial projections. Both types of plans are acceptable.
Calculate Your Startup Costs
Sometimes businesses fail because costs are simply too high. Businesses rarely make a profit in the beginning. Even so, many entrepreneurs are willing to leave comfortable jobs and forgo steady incomes to take the leap into business ownership. This can be scary, but for many, the rewards outweigh the risks. Caution is advisable, especially in relation to startup costs.
Calculating startup costs is a crucial step. But which costs should a business owner consider? There are quite a few; for example, when it comes to materials and supplies, it’s a good idea to not overspend on the newest equipment if it’s not essential.
An expense checklist may be useful in calculating costs. Think about the costs associated with equipment and furniture, hiring people, inventory, sales and marketing, permits, legal and professional services, rent, taxes, internet services, shipping and more. Business owners must also factor in employee wages and contractor payments.
One of the biggest threats to success is lack of research. By calculating costs, business owners can gain an understanding of how to price their products or services to cover expenses and determine profitability.
Choose Your Business Name
Among the most important steps to starting a business, choosing a business name ranks near the top, as your choice can spell success or failure. Established businesses often go through name changes on the way to success. For example, Google, a globally recognized brand, was originally named BackRub. And companies often change their names to make them easier for customers to remember. For example, Starbucks Coffee, Tea and Spice, Il Giornale Coffee Company was famously shortened to simply Starbucks.
Coming up with a winning business name can be challenging. A business name can reflect poorly on customers and investors, so it’s an exercise worth careful thought and preparation. Is the name simple, memorable and easy to pronounce? Does it reflect what the business does? There are many factors to consider when coming up with a business name. Quirky names or nonsensical words are fine; for example, Yahoo and Google have achieved great success. And because these types of names are unique, they may be easier to trademark. But there are risks associated with this style of business naming. For example, if the business grows internationally, its name may possibly have a different meaning in another language, which can be detrimental.
Further, a business name needs to be protected, which leads to additional steps to starting your business — registering it and, if necessary, acquiring licenses to operate it.
Register Your Business
According to the SBA, the four ways to register a business name are by:
- Doing business as (d/b/a)
- Domain name
Each method is different and not all are required, depending on the business type and location. But after you come up with a business name, you need to look into registering your business.
There are many reasons to register your business, including incorporation and tax purposes. Business registration involves multiple steps, and some of the forms you’ll need to complete may be available online. The first step is to determine whether business registration is actually required — this largely depends on the business location and structure. If registration is required, the next steps are to register with federal, state and local agencies, as needed.
Registering a small business at the federal level isn’t required unless the business needs a federal tax ID. Businesses seeking trademark protection can register with federal agencies, but first they need to file a trademark with the U.S. Patent and Trademark Office (USPTO). It’s typical for businesses to register with state agencies — many states require it. In some cases, state permits or licenses are often required to operate in a state, depending on the business type. Registering with local agencies is rarely required. Business laws and regulations can change, so the SBA recommends that businesses stay up to date with registration and licensing requirements at all levels.
An MBA from Rider Can Help Prepare You for Business Success
Enrolling in an MBA program can help equip you with the business background and leadership skills you need to succeed in your efforts. Rider University’s online Master of Business Administration program prepares graduates with business knowledge of accounting regulations, inventory management, project management and customer relationships, all of which are relevant to starting and managing a business. Learn more about Rider University’s online MBA program today.