Step-by-Step Procedures in Starting a Small Business

Starting your own business requires making many choices.

Entrepreneurship offers many rewards including being your own boss and making any decisions affecting you, the ability to choose your own hours, and increased income potential. More than 600,000 people every year start small businesses for these reasons and more, according to the U.S. Small Business Administration (SBA). (See Reference 1) Starting a small business looms large in the minds of many people, but you can quickly have a business up and running by approaching the process in small, logical steps.

Instructions

1. Spend adequate time planning your business before moving on to any other steps. It is easy to get excited when starting a business and rush through the planning phase in your enthusiasm to get the operation up and running. The planning phase proves to be possibly the most important step in the entire process, however, so address it with careful thought and due respect. Analyze your personal strengths and weaknesses to determine if entrepreneurship truly suits you. Starting a business takes long hours, determination, creativity and the ability to work steadily toward long-term goals. (See Reference 2)

2. Write a business plan. A well-written business plan includes detailed information on the business itself, financial strengths and limitations, the expected market, sales method, the service or product offered, and any funding obtained or requested along with the proposed use of such funding. Use this business plan to obtain funding if needed for start-up costs. (See References 4)

3. Address details and legal requirements such as naming your business and getting that name registered on either the state or federal level depending on whether you will operate locally or on an interstate basis. Decide on the business structure you will use such as sole proprietorship, limited liability corporation, a partnership, a C corporation or an S corporation. Apply to the IRS for an Employer Identification Number, needed in all states with an income tax. Contact your state Department of Labor or Department of Revenue to determine if additional requirements exist, such as business licenses or permits. (See References 5)

4. Locate all supplies and equipment needed to operate your business. Approximately half of all small businesses operate from the owner's home, but if your business does not fall into this category, finding an appropriate office location must be done at this time as well. (See References 3)

Tips & Warnings

• Find a mentor to support and advise you as you start your business.

• Consider having an attorney or accountant guide you through the legal process of starting a business to ensure compliance with all laws and regulations, both local and federal.

• Visit the SBA website or your local SBA office for additional free help in starting your business.

• While hundreds of thousands of businesses start every year, a roughly equal number fail every year as well. (See Reference 1) Understand that running your own business comes with many rewards but involves great risk.

References

• SBA: FAQ
• SBA: First Steps to Starting a Business
• SBA: Lease Equipment
• SBA: Write a Business Plan
• SBA: Licenses and Permits

Resources

• SBA: Services