10 Steps to Start Your Small Business

There are 33.2 million small businesses in the US, and small businesses have helped create 17.3 million new jobs over the past 26 years. Small business ventures are a long-honored part of the American dream, but how do you get started? 

In this article, we will share ten steps to help you get your small business started today.

1. Research. 
Market research is vital before you put any action or money toward a business. You may have a neat idea, but is there a market for it? Can you connect your products or services with the customers who need them? Does your business make sense financially? Talk to successful business owners, financial consultants, and mentors with real-life experience in the marketplace who can advise you.

2. Make a business plan.
A business plan is the road map you will follow to make your business successful. Within the first year, nearly 22 percent of small businesses fail, and this can be the result of a poor business plan. Your business plan needs to outline your goals for your business, and what strategies you will employ to reach those goals. A business plan will also be necessary to pitch your business to investors or funding partners.

3. Get funding. 
With a solid business plan, you can begin looking for funding. Funding is a make-or-break step for starting a business. Small business loans are one way to get funding, but many traditional banks will not give a loan to a business without a financial history (something startups do not have). Finding private investors is another way. Lines of credit with a credit card or a community development financial institution (CDFI) may also be options depending on your business type and goals. 

Some types of small business startups can use invoice factoring or purchase order financing. Purchase order financing is short-term financing that can help your business pay for the inventory needed to fulfill incoming customer orders, while invoice factoring is when a business sells its accounts receivable to an invoice factoring firm.  

4. Pick your location.
Whether you have a physical brick-and-mortar location or you are online-based, where you locate your business will impact your revenue, marketing approach, and legal requirements. Carefully research what location will best serve your business goals.

5. Choose your business structure.
How you legally structure your business will impact your registration requirements, liability, taxes, and more. Starting on the right foot with your legal structure will save time and money in the future.

6. Choose a business name.
Your business name is likely to be the first point of contact a potential customer or client has with your business, select a name that reflects your brand and your passion. You will also want to pick a name not currently used by someone else or is already strongly associated with another brand. 

7. Register your business.
Once you have picked a business name, register to protect it from competitors. This is an important part of establishing your brand identity and gaining legal status and benefits.

8. Get federal and state IDs.
Registering officially with the state and federal governments is a big step forward starting and growing your business. Your employer identification number (EIN) is what you will use to open a business bank account or pay your taxes.

9. Apply for the necessary licenses and permits.
The number of legally required licenses and permits will vary depending upon your state, whether you are online or brick-and-mortar, and what type of products or services you offer. Failing to procure all licenses and permits can create obstacles and issues you do not want to face when getting your business off the ground, so be thorough.

10. Open a business bank account.
Open a bank account for your business that is separate from your personal account. A small business checking account can help you handle legal, tax, and day-to-day issues.

Starting a small business isn’t easy, but it can be rewarding. Follow these ten steps to begin down the path to becoming a successful small business owner. 

Looking for financing options for your new small business? We can help. Prairie Business Credit is a national working capital provider to young, growing, or recovering businesses. We offer accounts receivable financing, purchase order financing, and equipment financing. Our company serves both as a trusted financial resource and consultant to entrepreneurs dedicated to building their businesses and ensuring their success.