Start a Business from Scratch in 10 Steps

Thinking of taking the plunge into entrepreneurship? You’re not the only one. The Wall Street Journal reports the number of people starting their own businesses in the US surged to a 13-year high last year.

Small businesses across the country shut down as a result of the coronavirus pandemic. Many of those recently unemployed decided to set out on their own ventures.

Launching and scaling a startup business is risky. About half survive their first 5 years says the US Small Business Association (SBA).

This doesn’t have to be you. With a little help from our business coaches, you’ll be set up for success from the very beginning.

Here are our 10 Steps to Starting a Business From Scratch:

1) Conduct a Self Evaluation

You can’t build a business without a firm foundation on which to stand. Do an honest evaluation of yourself and your business idea. This step will require considerable self-reflection and candor. 

Lay out your strengths and weaknesses. Examine your work ethic, available time, and business skills such as delegation and management. What are you good at? Public speaking? Networking? Budgeting?

Run it by your trusted mentors and peers for feedback and criticism. Ask others for a truthful perception of you and your abilities. 

This evaluation will give you a good idea of where you are now. And, a clear picture of the gaps you’ll need to fill either with personal training or the hiring of team members.

Next, do the research. Evaluate your business idea.

According to Business Insider, the majority of startup founders conclude their business proposition wasn’t as competitive as they once thought.

You can avoid this by diving deep into your desired market. Is your idea original? If not, how can you differentiate yourself and your product? Is there a high demand for what you have to offer? You’ll need to discover if the market is big enough for your specialty. Learn if enough people are searching for the solutions you have to offer.  

This research will determine which direction to take your product or service. Pivot toward the demand. Fill any industry gaps you discover.

2) Build a Business Plan

Every ambitious business needs a plan for success. Simple is best. The more complicated your business plan, the less likely it is you and your team will understand it. If you don’t understand the plan, how are you going to deliver on it?

You will also need to decide on a Business Structure. When debating the different types of business structures, keep in mind things like liability, taxes, flexibility, and cost.

Types of Business Structures:

• Sole proprietorship

• Partnerships

• Corporation or C Corp

• S Corporation

• Limited liability company

More on how to build a business plan here.

3) Understand Your Finances

It is vital that you look closely at your finances and budget for both the highs and lows. With the right amount of planning, you can assure your business rides out any potential stormy weather. 

Can you afford to take this leap? As a rule of thumb, you should set aside at least six months of living expenses before quitting your day job. We also recommend you wait until you have your first major client. 

Studies estimate it to take at least half a year before you’re generating enough money to start paying yourself a salary. Often, this timeline looks more like 12 to 18 months.

Get a grip on cash and always overestimate your expenses. 

For more budgeting tips, click here. 

4) Make It Official

• Get a Tax ID Number

  • Employers and other organizations must get an employer identification number (EIN) to identify themselves for tax administration purposes. Click here to learn how to get an EIN.

• Register with Your State

  • Check out your state’s website to set up and register your small business. To register with North Carolina click here.

• Make it Legal

  • The laws that apply to you depend on your state, business structure, and industry. Consider working with a small business accountant, like us, as you set up your company.

• Open a Business Bank Account

  • Do this when you're ready to start accepting or spending money as your business. The SBA has great resources for opening a business bank account.

5) Protect Your Business

Every single business needs insurance, no matter the industry. This could mean the difference between small inconveniences and bankruptcy. What kinds of insurance you should invest in depends on your unique needs. A few types of insurance businesses generally sign to include:

• General liability insurance

• Business income insurance

• Data breach coverage

• Professional liability coverage

• Commercial property insurance

6) Hire Your Team

Your people are the foundation on which your whole business enterprise is built. They handle your customers, drive your internal processes, and uphold the values and strengths of your brand. So, having the best possible team behind you is vital to the short and long-term success of your company.

Build a team of diverse minds. When assembling your support system, you will want to surround yourself with those unlike you. Hiring folks with different skillsets and points-of-view ensures you cover any blind spots you may have.

But how do you find those A-class people in the first place? And how do you keep the best people in the team and manage their performance over time? 60% of business owners say hiring qualified employees is their biggest challenge. We’ve pulled together some top tips on hiring and keeping the team you want.

7) Just Do It

A common mistake we see budding business owners make is stressing over the details before jumping in. Don’t waste time trying to make things perfect before starting your business. Launch and improve as you go. 

8) Start Branding Yourself 

Once you have workshopped and finalized your company name, it’s time for the real fun: developing your brand. Remember that these materials do not need to be perfect to start making a name for yourself. These will simply be the building blocks to your much bigger picture down the line.

Get started with a strong value statement that resonates with you, your team, and your future customers. 

Your company’s website will be your hub for sales, communications, customer feedback, and so much more. It is imperative that it be accurate, easily navigable, and informative. WordPress is a popular web builder that is beginner-friendly. They have a wide variety of free templates for you to get started. 

You’ll want to develop a recognizable logo. Something simple that reflects you and your services. And don’t believe you have to cough up exuberant fees for a professional graphic designer to create your collateral. The free online graphic design tool Canva has great logo templates and is easy to use. For a new business with limited funds, beginning here is a great way to save until you can afford other design services.

Another fantastic and free marketing tool is something we all use every single day. Social media. Build your social media presence on various applications such as Facebook, Twitter, LinkedIn, and so on. Keep in mind where your core customers are hanging out. An interior designer may find great results with Pinterest but a Pharmacist may not. These platforms are all as unique as the various businesses out there. Find your match and focus on that until you are able to scale up and maybe even dedicate a team member to your social media management. 

9) Write a Marketing Plan

Now that you’ve developed your product, brand, and business model: How are you going to get customers to buy your products or services? 

This is where a Business Marketing Plan comes in. A good Business Marketing Plan outlines your marketing strategy for the coming year, quarter, or month. Consider it a summary of the market you want to enter.

Map out who and where your core customers are, your company goals, and how you’re going to achieve them on organizational and individual levels.

We recommend you start customer-focused and more targeted on customer needs. Great business owners analyze their customers and find out what makes them tick. Plot out what their core needs are and sell them solutions that serve their genuine needs and improve their quality of life.

Having the customer at the start of your sales and marketing strategy helps inform your product development, target the right products and services, and deliver a targeted sales approach.

This customer-focused approach will keep your customers engaged and happy. And as we all know, it’s happy customers who come back to spend more money!

10) Prepare for Anything

We’ve all heard it, probably too many times: “Expect the unexpected.” This mindset is crucial to maintaining strong and steady business growth.

Investopedia defines crisis management as the process of identifying a threat to an organization and developing an effective response. 

Preparing for and managing any disruptive or unexpected emergency situations that can affect business, employees, customers, and/or revenue is an essential skill for every business owner to hone. 

What’s Next?

Have you tried starting your own business? 

There is no better time to start planning your business than today. Right now. You’ll never get anywhere if you don’t start somewhere. So, how can we help? 

Holden Moss CPAs is dedicated to aiding businesses in this difficult time. If you have any questions about starting your own business or are looking for coaching for an established business, give us a call at (919) 556-6216. You can also contact us via email at admin@holdenmoss.com. We look forward to working with you.