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Starting a new small business? Find out where to begin and how to boost your chances of success.
Starting a business can be hard work, but breaking down the process of launching your new venture into individual steps can make it easier. The following steps explain how to start your business, helping you transform it from an idea into a reality.
Small businesses make up nearly all U.S. companies — about 35 million as of 2024, according to the Small Business Administration. They employ almost half of the private workforce and drive much of the nation’s growth. If you’re ready to join their ranks, the steps below will help you get started on the right path.
If you’re thinking about starting a business, you’ve got to start with a great business idea. The challenge lies in turning an idea into a product or service.
Start by asking yourself a few important questions:
You don’t need concrete answers yet, but these questions will get you thinking more practically about what it takes to launch your business.
“In the words of Simon Sinek, ‘always start with why,'” advised Glenn Gutek, CEO of Awake Consulting and Coaching. “In this process, it may be wise to differentiate between [whether] the business serves a personal ‘why’ or a marketplace ‘why.’ When your why is focused on meeting a need in the marketplace, the scope of your business will always be larger than a business that is designed to serve a personal need.”
Your “why” might be:
Or your “why” might be more personal, like building a freelance business to create an income stream through writing or design work.
Your “why” can be anything, but understanding it helps you determine how to structure your business to achieve that goal. Before you even start business planning, it gives you a North Star to aim for as you flesh out your idea.
You spent some time in step one asking yourself key questions; now it’s time to put pen to paper. A well-written business plan helps you map out where your company is headed, how you’ll tackle challenges and what resources you’ll need along the way. Treat it as a living document you’ll revisit as market conditions shift or your business evolves.
Here are three areas to focus on as you create your plan:
C/15751-conduct-market-analysis.html”>Market research is the foundation of any solid business plan. It helps you understand your target customer demographics and their needs, preferences and behavior, as well as your competitors and the overall industry. Start simple with free tools like:
Once you’ve validated your idea, you can explore paid options like industry reports, survey platforms or professional focus groups. The goal is to gather both numbers (quantitative data) and customer opinions (qualitative insights) so you can spot opportunities and limitations.
Clarify your target customers
Before you can market effectively, you need to know who you’re talking to — your target customer. Consider the problems your customers face, how your business solves them, and what budget they’re working with. Think about their age range, lifestyle and buying motivations so you can tailor your messaging to resonate.
Stephanie Desaulniers, owner of Business by Dezign, said entrepreneurs often skip this step, which is a huge mistake.
“You need to clarify why you want to work with these customers — do you have a passion for making people’s lives easier? Or enjoy creating art to bring color to their world? Identifying these answers helps clarify your mission,” Desaulniers explained. “Then define how you’ll provide this value in a way customers are willing to pay.”
Later on, you might build detailed buyer personas, but for now, broad strokes are enough.
Consider an exit strategy
It may sound premature, but thinking about your exit strategy from the start helps you build with purpose. Will you grow and sell? Pass the business to a family member? Position yourself for acquisition? Identifying your long-term vision now gives you a clearer path forward.
Josh Tolley, founder and CEO of Kingsbridge M&A Brokers, put it this way: “When you board an airplane, what is the first thing they show you? How to get off of it. When you go to a movie, what do they point out before the feature begins to play? Where the exits are. Too many times, I have witnessed business leaders that don’t have three or four predetermined exit routes. This has led to lower company value and even destroyed family relationships.”
Starting a business comes with a price tag, so you’ll need to figure out how you’ll cover those costs. Do you have savings to fund your startup, or will you need to borrow money? If you plan to leave your current job, do you have enough savings to support yourself until you turn a profit?
Here are some important steps to take when assessing your startup’s financial considerations:
Calculate your startup costs
Understanding your startup costs is critical, since many businesses fail simply because they run out of money before revenue becomes consistent. It’s smarter to plan for more funding than you think you’ll need, as profitability often takes longer than expected.
Typical startup costs vary by industry. Ramp estimates that retail businesses often require $30,000 to $50,000 to get started, while manufacturing businesses may need $50,000 to $150,000, depending on equipment and facility needs, and service businesses typically require much less.
Your costs may differ, so it’s smart to calculate them carefully. The SBA’s startup cost calculator is a helpful tool for estimating expenses based on your specific business model.
Once you know your upfront costs, the next step is to figure out when you’ll actually start making money.
Perform a break-even analysis.
One way to figure out how much money you need to operate is to perform a break-even analysis. This tool shows when your company, product or service will start making money.
The formula is simple:
Fixed Costs ÷ (Average Price Per Unit – Variable Costs) = Break-Even Point
Use this formula to understand the minimum performance needed to avoid losses and set production goals. Entrepreneurs typically conduct break-even analyses to:
Minimize and track startup expenses
It’s easy to overspend when starting a business. To avoid this trap, steer clear of flashy purchases that don’t directly support your goals, and track business expenses closely.
“A lot of startups tend to spend money on unnecessary things,” cautioned Jean Paldan, founder and CEO of Rare Form New Media. “Spend as little as possible when you start, and only on the things essential for the business to grow and succeed. Luxuries can come when you’re established.”
Explore funding options
Your startup capital can come from several sources, depending on your credit, funding needs and available programs. Typical startup financing options include:
Choose the right business bank
You’ll need to open a business bank account with a financial institution that fits your needs. Marcus Anwar, co-founder of OhMy Canada, recommends working with smaller community banks because they understand local markets and make quicker decisions.
“They’re unlike big banks that look at your credit score and will be more selective to loan money to small businesses,” Anwar explained. “Small banks want to build a personal relationship with you and ultimately help you if you run into problems and miss a payment.”
When choosing a bank, ask yourself:
Write down your banking needs, then meet with a few banks to see how they support small businesses. This makes it easier to find the right fit.
Before registering your company, you need to decide what kind of entity it will be. Your business legal structure affects everything from taxes to operations to your personal liability if something goes wrong. Typical options include:
The right structure depends on your current needs and long-term goals. If you’re unsure, talk with a business or legal advisor to weigh your options.
Before you can legally operate, you’ll need to register your company and secure the proper licenses. The exact requirements depend on your structure, location and industry, but here are the main steps:
Business formation documents
You may need to file the following:
Tax IDs and forms
You’ll likely need to handle the following:
Licenses and permits
Depending on your business and location, you may need the following:
Although it might feel like something you can put off, buying small business insurance is an important step before you officially launch. Unexpected events — like property damage, theft or a customer lawsuit — can be costly, so you’ll want to be protected.
Although there are many types of business insurance, a few basics apply to most small businesses:
Your exact needs depend on your location and industry, but starting with these core policies will give you a strong foundation.
Unless you’re planning to be your only employee, recruiting and hiring should be among your first priorities. You’ll need a strong team to get your company off the ground. Joe Zawadzki, general partner at AperiamVentures, said entrepreneurs need to give the “people” element of their businesses the same attention they give their products.
“Identifying your founding team, understanding what gaps exist, and [determining] how and when you will address them should be top priority,” Zawadzki advised.
Zawadzki also noted that figuring out how the team will work together is essential to building a healthy company culture. “Defining roles and responsibilities, division of labor, how to give feedback, or how to work together when not everyone is in the same room will save you a lot of headaches down the line.”
Running a business can be overwhelming, and you and your team probably won’t be able to do it all on your own. That’s where third-party vendors come in. From HR service providers to business phone system vendors, B2B partners can help you run your business more efficiently. For example, the best business phone systems often include an interactive voice response (IVR) feature that automatically routes calls to the right representative.
Not every company will need the same vendors, but most businesses rely on partners for a few key functions:
Before you start selling your product or service, you need to build your brand and create an audience that’s ready for launch. Strong branding helps customers recognize you, while smart marketing builds anticipation and trust.
Start with these core branding elements:
With branding in place, it’s time to market your business. There are many ways to get the word out — from content marketing to paid ads — but email marketing is one of the most cost-effective places to start:
Your launch and first sales are only the beginning of your journey as an entrepreneur. To stay profitable and sustainable, you need to keep finding ways to grow. Growth takes time and effort, but you’ll usually get out of your business what you put into it. Here are a couple of tips:
Starting and growing a business is a big job, but you don’t have to figure it all out alone. Here are some trusted resources that can give you expert guidance, practical tools and even one-on-one support
Government resources
Educational resources
Planning tools
These resources are reliable, up-to-date and designed to support entrepreneurs at every stage — from writing your first business plan to managing growth.
Max Freedman and Skye Schooley contributed to this article. Source interviews were conducted for a previous version of this article.