Just like a baby learns to crawl, stand, and then walk, a business also has to pass through certain stages before it can be fully established. We call these stages the first steps to starting a business.
You cannot avoid these steps when starting a business and expect the business to do well.
This is because they are necessary and help to ensure that the business becomes successful in the end.
Hence, in this blog post, we will reveal these fundamental steps that must not be ignored as you embark on your entrepreneurial journey.
Therefore, without further ado, let’s get started…
First Steps to Take When Starting a Business
The first steps to starting a business are sometimes considered to be the foundation of a business.
Hence, the way you go about them will likely affect your business in the long run.
To ensure that you don’t miss this important stage of your business, here are the first steps to starting a business:
1. Generate Your Business Idea
Ideas help to suggest a possible course of action.
A business idea does the same.
It provides you with a suggestion of what kind of business you should do, what you need to do, and how you can about it.
Without a business idea, you might go about your business startup with no solid plan or aim.
Having a business idea does not mean you will have all the answers and the plan drawn out.
No, it just means that there is a suggestion, and you can work on it and make it better.
Therefore, what you have to do first is to generate a business idea before pushing forward.
So, how do you generate or come up with a business idea?
Since sitting down and squeezing your brain for an idea would not work, here are some ways to come up with a business idea:
Ask People Around You
Your business idea does not necessarily have to come from you.
So, you can ask your friends and family to give you suggestions of what you can do.
If you ask up to 15 persons, there is a good chance that a few of them will have some amazing business idea.
You just have to be attentive and open-minded because you can never tell which of your family members or friends will come up with a great idea.
As you ask them what they think, you can either jot them down or record your conversation with them.
This will help you have something to review as you make a decision.
Look at People’s Problems – First Steps to Starting A Business
Yes, the best business ideas can come from people’s problems.
‘How is that possible?’ You might wonder.
Lets us answer that by telling you a truth that not all entrepreneurs know
Everybody has some issues or problems that disturb them, and they all need solutions to those problems.
Several people will pay prices that will blow your mind just to get rid of those problems.
As an entrepreneur, you have to be smart and take advantage of this.
You can do this by discovering a good solution to people’s problems.
When you do, your business will grow and become successful.
So, you should consider this way of generating a business idea.
How to go about this is to find out what several people complain about.
Those things that they would love to get rid of or make better.
After you have found out what this problem is you can then work to get a solution to it.
Also, you can just look at what is bugging you and come up with a solution for it and check if other people have the same issue.
From there, you can capitalize on that problem by finding a solution to it and then make a business out of it.
Tap Your Skills or Interests – First Steps to Starting A Business
Your skills or interests can help you to come up with an amazing business idea.
Several people have used their skills or interests to build flourishing businesses.
An example of an entrepreneur who used his skill and interest into starting a business is Walt Disney.
Yes, the Walt Disney that we know today started from a young man’s passion to draw.
So, you can tap into your interests or skills and generate a business idea that will shock the world.
Go Online – First Steps to Starting a Business
You can come across something on the internet that will help you come up with an amazing business idea.
The internet is filled with so many things with good potentials.
So, check out various sites online.
You can never know when and where an idea will strike while web surfing.
2. Conduct Market Research – First Steps to Starting a Business
Now that you have a business idea, you can now move on to the next step which is to conduct market research.
The process of gathering relevant information about a business target or ideal customer and existing business in your sector is termed market research.
The purpose of conducting market research is to find out if your business idea can become a thriving business.
It gives you an insight into what clients or customers dislike and like and how existing businesses are operating.
With this insight, you can know the target to set for your business and start developing effective strategies to market your business.
To conduct market research you need to know how to rightly put out accurate questions to people who will answer to them.
You can follow these steps to conducting your market research:
Identify Your Research Purpose
To start your market research, you have to identify the purpose of it.
You can do that by asking yourself:
- The core information you want to uncover with your research
- What you desire to discover about your market and customers
When you have answered these questions and identified your research purpose, your research will stay effective and focused.
Create Your Questions – First Steps to Starting a Business
As we briefly mentioned earlier, your questions have to be accurate when researching.
Hence, the next step to conducting your research is to create accurate questions that will reflect your research purpose.
These questions have to include questions about your market, potential customers or clients, and competitors.
When you have gathered your questions, you can then go on to the next step.
Compile Your Market Research
To compile your data, you can make use of one of the types of data compilation:
- Quantitative Information: This is used to come to a specific conclusion and it involves many respondents(questionnaires and surveys).
- Qualitative Information: This is more analytical and it involves few respondents(detailed interviews and focus groups).
Both types are done by asking questions.
The common methods of data compilation are mailed questionnaires, personal interviews, online surveys, and telephone polling.
The type of data compilation you choose will determine the method you will use.
Interpret Your Discovery – First Steps to Starting a Business
The next thing to do is to organize and interpret what you have gotten from your research.
When organizing your discovery, you have to remember your research purpose.
This will help you to focus on only the data that you need.
When you have organized your data, you have to look at them closely and find out what your research means.
This will help you to comprehend what your research has discovered.
Finalize and Make Your Decisions
This is the last step which involves drawing conclusions and making your decisions.
To do this, you have to ask yourself these questions:
- What does my discover mean for my business?
- What will my action towards it be?
When you have answered these questions, you will know what to do.
If the research favors your business idea, you should go for it.
However, if it does not, it will be best for you to come up with another business idea.
3. Write the Business Plan
After conducting your market research and the discovery favors you, the next step to take is to draft or write out your business plan.
Business plans are guides that outline businesses’ visions, goals, and course of action on how to accomplish those visions and goals.
Therefore, they serve as a foundation for businesses.
How a business plan is written or drafted will determine how a business will operate.
Furthermore, you will need a business plan to get people to invest in your business or work with you.
Hence, your business plan has to be good.
A good business plan contains an executive summary, the business description, marketing strategy and analysis, competitive analysis, etc.
4. Get Funds for Your Business – First Steps to Starting a Business
Money has been and will continue to be an important factor when starting a business.
Hence, after you have written your plan, you will have to start sourcing for your business funds.
To do that, you have to have an estimate of the cost of the startup.
When you have the estimate, the next thing to do is to think of how to get the money.
There are different ways to get funds for your business, and they are:
You can self-fund your business with your savings, or with the money gotten from selling your valuable item.
However, if you do not have enough money in your savings or from selling your valuable, you will have to look for funds elsewhere.
Borrow From Family and Friends – First Steps to Starting a Business
You can source funds from your family members or friends.
However, when going through this route, be professional and set clear terms.
You can write everything down to avoid issues.
Banks offer loans to business people with a good business plan and a spotless credit record.
It is not that easy to get a loan from a bank, but it is possible.
So, if you can meet their requirement, you can opt for this.
Venture Capital Firms– First Steps to Starting a Business
Venture capital firms invest in startups and small businesses that they believe have great growth potential.
These firms get equity in exchange for their investment.
They are more interested in growing the business and getting returns than in the entrepreneur.
To get investment from these firms, you need a good business plan and your business has to possess the potential to be great.
Angel investors are individuals who invest in entrepreneurs or small startups in exchange for ownership equity.
They encounter several entrepreneurs but they do not invest in all.
To get an angel investor to invest in your business, you have to have a good business plan.
Crowd-funding – First Steps to Starting a Business
People go online on crowd-funding platforms to invest in businesses of their choosing.
You can go on to these sites and pitch your business idea; you can get fortunate and get many people to invest in your business.
The government organizes programs to award grants to entrepreneurs.
So, you can get money for your startup this way.
However, to be awarded a grant, you have to meet the requirement for the grant you want.
Credit Card – First Steps to Starting a Business
You can also get money for your startup from your credit card.
This option allows you to withdraw a small amount from your card or all the money in it.
The interest rate is quite high.
So, you have to be ready to pay if you go for this option.
5. Choose Your Location
Once you have gotten the funds for your business startup, the next step to take is to choose the location of your business.
This is considered a crucial decision you will have to make during the first steps of starting your business.
Where you set shop will have a significant effect on your legal requirements, taxes, revenue, growth, etc
Do not think that you will not be affected if you launch an online store.
So, regardless of whether it’s a physical or an online location you have to make a good decision.
Your business should be located where it will favor it more.
For instance, if your business deals with children’s clothes, then it needs to be located in an area where a large number of children reside.
You will get the most out of your business this way.
Check this out to discover some of the effects of business location on the business’s success.
6. Decide On Your Business Legal Structure – First Steps to Starting a Business
The next step to take after choosing the location of your business is to choose your business structure.
Business structure is the legal structure that an organization is recognized as in a particular jurisdiction.
A business’s legal structure determines the activities that a business can carry out, such as the business responsibility and obligation, and capital raising.
It also determines the amount a business will pay to tax organizations.
Hence, you should not take it lightly but rather be careful and choose the right legal structure for your business.
To choose the right business structure you have to know the type of structure there are, hence, below are the four types of business structures:
A sole proprietorship is a business legal structure based on one person’s ownership.
Such a person owns and runs the business alone.
The business and its owner are not legally distinct in a sole proprietorship.
This legal structure is commonly used by small businesses.
General Partnership – First Steps to Starting a Business
This legal structure is the association of individuals who aim to seek profit from a business venture.
The partners in a general partnership share the business profits, loss, liability, taxes, etc.
With this legal structure, an agreement has to be made to formalize the rules for ownership percentage, loss/profit sharing, management rights, dissolution terms, etc.
This is a legal structure that separates the entity from the owners also known as shareholders.
The owners are required to fulfill more tax regulations and requirements.
People become owners when they get a share of the business stock.
There are two forms of corporations; S-corps and C-corps.
Tax treatment is the main difference between the two structures.
Limited Liability Company (LLC) – First Steps to Starting a Business
This legal structure is a blend of a general partnership, and a corporation.
In other words, LLC possesses the features of corporation and partnership.
However, every member’s share is dependent on the amount they invested in the business.
This legal structure has no limit placed on the number of members/ shareholders.
7. Name Your Business
When you have decided and chosen your business legal structure, the next thing to do is to name your business.
The name you choose will have a significant impact on your business.
Hence, you have to be careful to choose the right one.
To do this, you have to:
- Decide what your business should communicate to people through its name
- Choose a business name that pleases both you and your target market/audience; let them relate with it emotionally
- Steer clear of unusual spellings
- Be careful of how it translates in other places
- Think long-term
- Make sure it is relevant to the type of business you want to operate
- Make it peculiar to you
- Make it easy to pronounce, spell, and remember
8. Register the Business – First Steps to Starting a Business
With your business name chosen, the next action to take is to legalize it by registering your business.
The requirements for registering a business can vary based on where you want to register.
Hence, you have to find out what the requirements are before you go for your registration.
However, the basic requirement is the name of your business and its legal structure.
Conclusion on First Steps to Starting a Business
The first steps to starting a business are necessary for the successful start and operation of your business.
So, you need to go through each of them properly.
When you do, you will enjoy the benefits as your business starts operating.