Business Link: 8 Essential Steps to Starting a Business in 2021
The effort that goes into creating a new business is immense, but it’s ultimately very rewarding. Every step you take toward launching puts you one step closer to building something you’ll be proud of. Even when you experience setbacks as you start a business, you gain valuable experience. This type of trial and error leads to increased knowledge and growth, making you all the better prepared for future projects.
Still, it’s true that the sheer amount of work that goes into starting a business can be overwhelming, to the point that people often don’t know where to start. Many would-be-entrepreneurs have had their progress slowed or halted due to overwhelm.
Though starting a new business can be a difficult undertaking, you don’t have to let yourself be stopped just because you don’t know the right steps to take. Every business is different, so you may not take a cookie-cutter path on your entrepreneurial journey. However, there are some universal steps that everyone can take as they start their business. By understanding and following these steps, you can lessen your stress and make sure you’re always moving closer to launch. Thinking of starting a business yourself in 2021? Here are the 8 essential steps you need to take.
1. Assess Your Goals & Yourself
The first thing you should do when starting a business is take a step back and self-assess. By taking a cold hard look at your skills, your motivations, your goals, and your resources, you can start to understand what paths may be open to you, which will help you narrow your focus.
One way to assess your new business possibilities is by doing a SWOT analysis. This exercise has you assess your Strengths, Weaknesses, Opportunities, and Threats. To do this analysis, divide a piece of paper into four sections to create a template, then fill in each section. If you’re not sure what types of things you should consider for each section, here are some suggestions:
- Strengths (Internal, Positive Factors):What do you do well? What resources do you have access to (including both positive people attributes, such as knowledge and know how, and any tangible assets)? Do you have any advantages over potential competitors?
- Weaknesses (Internal, Negative Factors): What may hurt your ability to compete in the marketplace? What areas can you improve on to be more competitive? What resources do you lack?
- Opportunities (External, Positive Factors): What marketplace opportunities can you take advantage of? Is there growth in the marketplace? Is there a time that will be ripe with opportunities or is opportunity ongoing?
- Threats (External, Negative Factors):Who are your potential competitors? What uncontrollable factors could hurt your business? Have there been any unfavorable market shifts that could hurt your business?
As you work through your analysis process, make sure you can answer this question by the time you finish: why do you want to start your business? You shouldn’t move forward if you don’t have a solid answer to this question, so take your time. You need to make sure that what you create is based on the best business idea for you, not just a great business idea in general. Focus on creating a business that lines up with your aspirations and what you’re passionate about if you want to have a solid foundation.
2. Develop Your Business Idea
Most people have at least some idea in mind when they decide to start a small business. Once you’re sure you want to move forward with starting your new business, it’s time to flesh your business idea out.
Later, you’ll create a more detailed business plan. But, for now, outline a lean plan that will detail the following things:
- Your brand values.
- The marketplace need your business will meet.
- Your solution to a marketplace need.
- Your target market.
- Your potential competition.
- Your sales channels.
- How you’ll reach your target market.
- Revenue streams.
- Business expenses.
- Target progress milestones.
- Your business team and partners.
To fill in all these parts of your lean plan, you’ll likely need to move on to step three of starting your business: conducting market research.
3. Research the Market
Conducting market research is an essential part of the startup process. Market research can help you understand who’s in your target market, how to reach your target audience, who your competitors will be, and much more.
To conduct market research on your own, you can:
- Search for information online.
- Read books by industry leaders.
- Read industry publications, such as magazines and news websites.
- Research key people or companies.
- Talk to people who already work in your target industry.
If you’d like help with your market research, you can also take advantage of resources like Small Business Development Centers (SBDC), which provide no-cost consulting and low-cost training to new and existing businesses.
4. Create a Business Plan
Once you’ve conducted thorough market research, it’s time for you to create a more complete business plan. At a minimum, you should draft up a complete lean plan. Beyond that, what you add to your plan is up to you. You don’t need to create a massive document if that won’t be helpful for you or your business. But make sure you focus on what will. This could mean fleshing out an operations plan or a strategic plan alongside your general lean plan. Or, you may just want to add a bit more about one or two elements, such as your management strategies, metrics, resources, financial plan, roadmap, etc.
5. Iron Out Legal Details
At this stage in the business formation process, it’s time to think about legal details, including registering your business. Registering your business is an essential startup step. But before you rush into registering as a sole proprietor, partnership, corporation, or Limited Liability Company (LLC), make sure you carefully research these business structures. You need to fully understand each option’s pros and cons in order to decide which will work best for your business.
In addition to registering your business, you may need to secure certain business licenses and/or permits in order to legally run your business. If possible, hire an attorney to help you iron out these types of legal details (an attorney can also help you register). An attorney is a worthwhile investment, since legal details are not details you want to get wrong. On a related note, now is also a good time to find and hire any essential freelancers or full-time employees that will handle things like bookkeeping and accounting.
6. Secure Funding
At this point, you have your business plan in order, so you understand the type of funding you need to get your business started. Now, it’s time for you to secure that funding.
Small businesses have multiple options for securing investment and lending funds. The most common include:
- Angel investment
- Venture capital
- SBA Loans
- Commercial Loans
- Credit Cards
- Friends and Family
You know your current resources and what your small business needs, so consider which of these options would be right for you and your type of business, then take steps to secure funding. Note that getting funding through many of these options requires pitching your business. So, before you actually try to secure funding, you may want to develop and practice your business pitch to improve your chances of success.
7. Secure Your Location
Once you have funding, it’s time to move forward with securing your location. In today’s increasingly digital world, many small businesses exist solely online. This is more true than ever in early 2021, due to the ongoing impact of the COVID-19 pandemic. If you’re starting an online business, you’ll now focus primarily on building your website and digital presence. If you need a physical location for your business, you’ll also need to focus on finding a brick and mortar location that will help your business thrive.
When focusing on your business’s digital location, consider:
- Whether you’ll hire someone new for web development or handle it with your existing team.
- How users will feel when they interact with your site design.
- Which eCommerce platform you’ll choose.
- How you’ll communicate with customers or clients.
- How you’ll communicate with a virtual workforce.
- How important social media will be for your small business.
- How your social media strategy will complement the rest of your digital presence.
- Whether you plan to sell products on external sites, such as Amazon or Instagram, in addition to or in place of your website.
When deciding on a brick and mortar location, consider:
- The affordability of your desired location.
- The visibility of your desired location.
- How accessible your location will be for your target market.
- Where your competitors are located and how competitor closeness could positively or negatively affect your business.
- Whether or not you can comply with all local regulations at your desired location.
8. Make a Plan to Assess Performance
At this point in the business startup process, you’re very close to launch. But before you go full steam ahead, do one final thing: make a serious commitment to assess your future performance.
You may have outlined how you’ll evaluate milestones and metrics in your business plan, in which case you should re-commit to honoring that plan. If you didn’t include this in your plan, prioritize doing so now. To ensure that you don’t end up letting regular reviews pass you by, consider setting up a monthly review date that you’ll always honor.
The importance of regularly reviewing your business numbers and strategy can’t be understated. Ongoing assessment is an essential part of entrepreneurship and running a successful business. Whether you’re a first-time business owner or a more experienced entrepreneur, you’re going to experience bumps in the road during the growth process. To make sure you can tackle issues and growth blocks head on, you need to regularly look at how what you’re doing is impacting your results. Don’t let foreseeable or actionable problems be the reason your new business fails. Instead, make a business review plan and stick to it.