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Starting a Business? Steps to Startup Success

Starting a business can be a complicated process, not because any one step is complicated or difficult, but because there are hundreds of individual steps to get from a business idea to opening your doors for business. The sheer number of steps seems overwhelming when you look at them at as a whole. However, if you break the steps down into groups, starting a business soon becomes a manageable process.

Planning Steps to Starting a Business

The number one reason businesses fail is that they failed to adequately plan their business before starting. Before you attempt to put together a formal business plan, you actually have to plan out every aspect of the operations and business of your startup.

Start by clearly describing exactly what your business will do and how it will get done. What will your business be named? What will it do? What procedures or processes need to be in place? Then, work through each of the other aspects of your business and plan how each will be done. Finally, consider your longer term plans. Where will the business be at the end of the first year? At the end of three years? In five years?

After you have completely planned your business, including planning for the legal, marketing, and financial aspects of the business, you can easily assemble a formal business plan to be used for obtaining investors or funding.

Legal Steps to Starting a Business

A business can exist as a legal entity separate from you as an individual. Because of this, there are a number of legal steps to starting a business. First, you need to register your business entity (LLC or Corporation) with your state government or file a DBA (doing business as) with your local government, if required. You will also need to do the additional paperwork for your entity. (by-laws for a corporation or operating agreement for an LLC).

Once the entity is established, you can then take care of the other legal steps, including your business license, sales tax permit, federal employer identification number (EIN), and any specialty licenses or permits that are required. If you will be using contracts as a part of your business operations, you will want to get those drafted by your attorney and ready to use. Finally, be sure to set up a record-keeping and calendar system so that you are prepared for annual filing requirements and license or permit renewals.

Marketing Steps to Starting a Business

To have a successful business, you will need successful advertising and marketing. The first step is to determine exactly who your target market is. Who will be the most likely purchaser of your product or service? Define your target market in as much detail as possible. Next, define the benefits of your business as it will be seen by your target market.

With these two pieces of information, you can build a comprehensive marketing plan that analyzes each possible means of marketing, the cost of each, and the expected return on that investment. Finally, prioritize your marketing efforts to start with the most effective effort first adding additional types of marketing as your business picks up. Be sure that your plan includes a way to evaluate each marketing effort to be sure that you are getting your money's worth. Typical evaluations are cost per potential customer added to your database and cost per sale.

Don't forget personal and business networking as means of marketing your business. Networking is so important both to building a customer base as well as building relationships with other businesses to provide mutual referrals to great suppliers, accountants, attorneys, and insurance professionals.

Financial Steps to Starting a Business

So many people think the first financial step to starting a business is to obtain their startup funding. Nothing is farther from the case. The first step is to make a complete financial plan, including startup costs, first year expense and sales budget, and a targeted three year budget. Building your startup and first year financial plan will rely heavily on the planning, legal, and marketing steps that you have already taken. Consider everything -- the most common mistake in developing budgets is to leave something out completely (commonly things such as insurance, employee benefits, and maintenance costs are omitted).

Once your financial plan is in place, you can begin developing your startup funding. Some entrepreneurs are able to fund their business completely from their own assets, either through cash on hand or selling assets to raise cash. Many, however, will be looking for some type of outside funding. The most common sources of outside funding are loans and direct investments. In a loan, you incur a debt that must be repaid, however, the lender does not own any portion of your business. With a direct investment, the funds do not have to be repaid, however, the investor owns a portion of your business and will share in the profits of the business.

Bottom Line

Starting a business requires you to take hundreds of individual steps toward the goal of your grand opening. Staying organized and having a plan of attack will allow you to navigate those steps efficiently and get you on the road to owning your business as quickly as possible.

About the Author

LaunchX.com is dedicated to training entrepreneurs to turn their good ideas into great companies. The LaunchX System provides step-by-step education in the mindset and skill set entrepreneurs need to succeed. Our program includes intensive seminar training, key business software, and specialized workbooks that teach you the fundamental skills you need to achieve your financial and worklife goals through entrepreneurship. Register today for our introductory course and see what LaunchX can do for you!