8 Steps to Start a Small Business From Scratch Starting a business feels more manageable when you follow a straightforward, step-by-step process.
By Joseph Ferriolo Edited by Amanda Breen
Opinions expressed by Entrepreneur contributors are their own.
We do amazing, meaningful things every day, but in small increments. We build a life, a family, a career, a worldview, a legacy — all in bite-sized pieces that are manageable in the moment, yet impactful in the long term.
This feeling that the challenge of starting a business is too big is a primary obstacle many entrepreneurs see blocking their road to financial independence. And yet, the basic process of building a business can be as step-by-step as starting your coffee pot in the morning or driving to work.
Turn things on, get in gear, find a starting point and go.
That's not to say that it's easy or that there's no work involved. But when creating a small business, a series of steps becomes manageable instead of a neverending staircase you have to run up.
Related: Low Cost Business Ideas, How to Start a Small Business
In the spirit of taking things one productive piece at a time, here are the eight steps we recommend for starting your own small business.
1. Get a strategic business plan
A business plan is the living structure of your company. It creates a pathway for success and lays out strategies for revenue, marketing, hiring, profit margins, competition and competitive advantages. You'll also use your plan to share your vision with potential investors, bank-loan officers and even new company managers and branding experts.
2. Incorporate your company
The business formation process can be contracted out to professionals or handled piece-by-piece as you go along. If you work with a company that offers this kind of service, it can also handle many of the tasks in the following steps for you. Unless you plan to work as a sole proprietorship, which has different rules and can often be managed the same way as freelance work, you'll want to create an LLC or limited liability corporation. You can learn more about which business structure to choose on the Small Business Administration's website.
3. Get a Tax ID number
In most instances, a small-business owner will need to file for a Taxpayer Identification Number (TIN), which the Internal Revenue Service (IRS) uses to administrate tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. According to IRS.gov, a tax ID number is not required if you operate a sole proprietorship or an LLC with no employees. However, if you plan to have employees, you will need to get an Employer Identification Number (EIN) that they can use for filing taxes. An EIN can be applied for online if your business is located in the United States or U.S. Territories, and you'll first need to have a TIN to apply for an EIN.
4. Get a business license
Your business licensing requirements may differ depending on the city, state or county in which you are doing business and the kind and size of business you plan to start. For example, in some states, sole proprietors do not need to acquire a business license (though certain companies and services have individual licensing and permit requirements). This is one of the kinds of services a business-formation company can assist you with or even handle on your company's behalf.
5. Create a brand
Branding is about more than a clean, eye-catching logo and a standard set of colors you use for things like product packaging, business cards and your website. Those things are vitally important — and often overlooked — but the tone of the words in your marketing materials and how your images, graphics and products make customers or clients feel is also a part of your branding. Decide what the emotional resonance of your company should be and then use that to inform all your branding choices. Once you've decided on a look and feel, stick with it. Consistency of messaging is vital to brand awareness.
Related: 9 Strategies to Boost Small-Business Profitability
6. Build a website
A good business website is more than just due diligence for business owners in 2021. It's essentially a fundamental part of the business creation process, and it is nearly impossible to do effective business without one, much less reach your growth and sales potentials. Contract with a reputable full-service company, work with a talented freelancer or even create a simple yet effective landing-style homepage yourself; whatever it takes, get a web presence up and running by the time you're ready to launch.
7. Get a business bank account
This may seem like an extra step when you're in the thick of business planning, but choosing a bank that goes the extra mile for small businesses is vital to your success. Look for dedicated business checking accounts with low or no fees, small starting deposits, ATM accessibility in your area, interest-earning accounts and online or mobile banking tools geared toward making small-business processes easier.
8. Plan and execute a digital-marketing strategy
Digital is the name of the game now; it's not a trend or something new everyone is looking to get into. Digital marketing, whether it's finding an influencer to partner with or creating just the right voice for social, is going to play a central role in how you get the word out about your business. Look for social-media-marketing managers who are agile and able to keep up with the ever-changing social world. Chances are, they'll be able to handle any other digital-marketing needs you have and even suggest new channels for growing your customer base.
Owning a business is a lifelong project, and small-business owners put their hearts and souls into their companies day in and day out. But taking that leap into entrepreneurship doesn't really have to be, well, a leap.
Related: 5 Things Not to Do When You're Running a Small Business
