12 Actionable Steps to Start Your Own Business [2022 Guide]

It's never too soon to start working toward the goal of becoming a business owner. We've created a detailed guide with strategies and steps to get you there.

Starting your own business can seem like a smart way to avoid the 9-to-5 routine and make real money. If you have a winning idea and the ambition to strike out on your own, careful planning will set the stage for successful execution. 

We've created this comprehensive 12-step guide to starting a business as a road map for this challenging yet rewarding journey.

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12 Steps to Start a Business

Starting a company from scratch is a big undertaking, so we've broken the process into these manageable steps. While some parts of the path overlap, each action gets you one closer to connecting with your first customers.

1. Fine-Tune Your Company's Concept

Before you begin building your business, you need to know exactly what you plan to offer – and understand what would make your idea appeal to your target audience. When you have a general concept in place, it's time to conduct a competitor analysis to learn more about the market. 

As you assess similar businesses, look for ways to improve on what's already out there. Questions to ask include:

  • What gaps in the market can I address?
  • Can I provide competing products and services at a lower price point?
  • Can I improve on the quality of competitor offerings?

By examining the market before starting a business, you'll improve your competitive position. After all, your audience won't be impressed unless they're getting something new from you, whether that's a better price or solution to a pressing problem. You'll also use the data you gather in your competitive analysis to develop your business plan (more on that later).

2. Find Your Target Audience

In addition to analyzing the competitive landscape, you'll also need to get to know your target market. You should examine their purchase preferences, see where and how they spend time online, and find out what they're looking for from brands like yours. 

When your target market is too broad, you'll spend a lot of money on minimally effective marketing. Instead, you want to strive to speak directly to a specific group. 

For example, if your product is an app to find workout buddies on the go, dig deeper than just "men and women ages 20 to 50." Add characteristics like target income and lifestyle and narrow it down: "men and women ages 20 to 50 who travel for work, don't mind meeting up with friends from social media, and earn at least $75,000 annually."

3. Figure Out Funding

Financing your business may involve savings, funds borrowed from friends and family, or traditional business loans. Many new entrepreneurs combine those approaches. It's also common to work a regular job while you build your business on the side. 

Whatever your financing strategy, you'll need to come up with a fundraising benchmark. That's the amount you estimate for total start-up costs.

This step in the process also requires a break-even analysis. This calculation can help you determine when your business model will begin to drive profit. You'll use this simple formula:

Fixed Costs ÷ (Average Price – Variable Costs) = Break-Even Point

4. Select the Right Structure

Even if you're a solo business owner, registering your company as a legal entity can help you protect your personal assets. You can select from several structures depending on your objectives, owners, operational needs, and other factors:

  • Sole proprietorship, which consists of one person who files business taxes under their personal Social Security number. This structure simplifies the process of paying taxes for your company, but it doesn't shield you from personal liability for business matters. In other words, if someone sues your business, you could have to sell personal assets to pay the resulting legal judgment. 
  • Limited liability company (LLC), which offers tax advantages along with limited liability. Owners known as members share the LLCs profits and expenses.
  • Partnerships, which have at least two owners. They share profits as well as legal liability. Like sole proprietorships, partnerships have "pass-through" taxation. Each owner reports their share of profits and expenses on their individual income tax return.
  • Corporations, which can raise money by selling shares of the company. They offer limited liability, but members must pay taxes on both the individual level and the corporate level.

Each structure has unique benefits and drawbacks depending on the type of business you plan to start. When selecting a business entity, you may want to consult with an attorney who has detailed knowledge of the business laws in your state.

5. Create a Comprehensive Business Plan

You've come up with a strong business idea with features and benefits that put it a cut above the rest. Now, you need to show others how you plan to succeed by writing a detailed business plan. It should ideally include:

  • An executive summary with a description of the business, your goals, and how you plan to meet those objectives
  • The structure of your business, whether you're a sole proprietor or plan to start a corporation, partnership, or limited liability company
  • A detailed description of the products and/or services you'll offer, including how these items will solve a common problem for your target audience, what differentiates your offerings from competing items, how much you plan to charge, and information about the manufacturing process if applicable
  • A projected financial plan covering the next five years, with a proposed budgets, cash flow statements, balance sheets, and income statements
  • A market analysis that shows off your competitive position and describes market segments, growth potential, size, and trends
  • The company's mission, vision, and goals, which should follow the SMART framework (Specific, Measurable, Actionable, Realistic, and Timely)
  • A detailed background analysis that includes research about external factors that could negatively impact your plan, along with how you plan to alleviate this risks

6. Name Your New Business

You'll need a name that helps your business stand out from the crowd. When you have a few options in mind, search to make sure someone else didn't already have the same idea. You can check the database through the Secretary of State for local registrations and the United States Patent and Trademark Office for federal registrations. You won't be able to register a name that's too similar to another business name in the same sector. 

Tips and Tricks for Business Naming

If you need inspiration, try these tips:

  • Consider your target audience. Think about the type of name that appeals to their sensibilities. Some markets might appreciate a straightforward approach while others are attracted to more abstract business names.
  • Pick something searchable. You'll want your business to pop to the top of search engine results, not fall to the bottom because it has a super-common name.
  • Be specific. Your business name should explain what you're all about. However, don't be so narrow that you limit yourself to one sector. Remember when Dunkin' Donuts suddenly became Dunkin' to account for their breakfast sandwiches and other offerings?
  • Ask around. Talk to friends, family members and acquaintances in your target market. Their reactions to the name will tell you a lot about how customers might react, as long as you survey people who will give an honest opinion.

When you find a unique name, make sure the domain name is available before you finalize. You can add words or state abbreviations if necessary to get a URL that fits.

7. Prepare to Pay Taxes

If you have a sole proprietorship or an LLC with no employees, you can pay taxes with your Social Security number. Otherwise, you need to register for an employer identification number (EIN) with the IRS. In addition, any business that hires workers must have an EIN. 

You can get this number immediately for free by completing the IRS's Form SS-4: Application for Employer Identification Number online. You'll need to provide:

  • Your name, address and Social Security number
  • The type of business entity
  • The names of all business owners (or members for an LLC)
  • The reason you're applying for an EIN (starting a new business, hiring workers, or opening a bank account for your business)
  • The date you started the company
  • The date you'll first pay workers if applicable
  • Whether you'll file a quarterly or annual tax return as an employer, if applicable
  • Your industry
  • Information about the types of services and products you sell
  • The maximum number of workers you expect to have over the next year and their roles
  • The closing month of your company's fiscal year

You can access Form SS-4 on the IRS website from 7 a.m. to 10 p.m. Eastern Time, Monday through Friday. If you prefer, you can print the form and send it by either mail or fax. 

8. Obtain Registration, Licenses, and Permits

Once you have a name and you've selected a business structure, it's time to make it official. Most states require registration with the Secretary of State to operate an LLC or corporation. You don't necessarily need to register a sole proprietorship or partnership, but doing so can protect your business name and help establish your brand.

The registration form typically asks for:

  • The name and contact information for your business
  • The name and contact information for all business owners
  • The EIN for the company or Social Security numbers for all owners
  • Copies of necessary licenses, permits, and other documents

During the registration process, you'll select a registered agent. This person or business must live in the state of registration. They agree to accept legal processes and other official documents on the company's behalf. You'll also have to pay a filing fee.

The types of permits and licenses you'll need varies based on:

  • The kind of business you start
  • Where you're located
  • What products and services you sell

9. Open Business Bank Accounts

You can use your EIN or SSN along with your business registration to set up bank accounts for your business. You should have at least a separate checking account and credit card, even as a sole proprietor. It makes it much easier to pay taxes and deduct the right business expenses. Separating personal and business accounts also helps protect you from business debts and legal judgements.

When selecting a bank for your business, you'll likely decide between a large financial institution, a small regional or local bank, or an online-only banking service. The best option depends on what you value from your bank and the type of relationship you plan to build. For example, if you prefer convenience, online is the way to go. 

10. Set Up a Payment System

You'll need a way to accept customer payments, whether you have a physical location, an online presence, or both. You may send invoices as a service provider or design a checkout page branded with your business logo and color scheme. Pay.com offers flexible, comprehensive payment services that fit your needs now and scale with your business as well.

It takes just a few minutes to get ready to take multiple methods of payment for your products and services. After the simple onboarding and acceptance process, you can manage your transactions and preferences from our intuitive Pay Dashboard. We make it easy to take your business live. 

If you take payments online, you're responsible for ensuring the safety of customer data. Pay.com takes on that critical task with tech like tokenization, which shields credit card numbers and other private information during transit. In fact, our services meet the highest level of compliance with Payment Card Industry Data Security Standards (PCI DSS).

Don’t wait till the last minute – click here to get started with Pay.com now!

11. Buy Business Insurance

Most business owners should purchase general commercial liability insurance. This policy pays for legal defense and covers settlement or judgment costs if someone sues your business. 

Depending on the type of company you plan to start, you may also need:

  • Business interruption insurance, which covers your income if you can't run your business for several months because of a natural disaster, flood or fire
  • Property insurance, which provides coverage for your business's physical space and assets, including equipment, inventory and real estate
  • Product liability insurance, which pays for lawsuits arising from products you make, distribute, or sell
  • Employment practices liability, which covers the costs of employment-related lawsuits such as harassment or discrimination claims
  • Workers' compensation, mandated in nearly all states if you have employees, which covers an employee's costs associated with a workplace injury or illness

12. Market Your Brand-New Business

It's finally time to roll out the red carpet for your customers, but first you need to let them know that you exist. While you may not have a full-on marketing plan in your early days of operation, you do need a few important marketing assets:

  • Your business website, the primary place new customers will go to find out about your company. In fact, it might be your sole location if you open an ecommerce-only  enterprise. Even if you'll focus on your physical location, having a website helps build trust with your potential customers and gives you a point of virtual engagement.
  • Social media platforms, focusing on the apps where your target audience tends to hang out. These accounts will give you a way to interact with your audience in real time to develop a following. You can also provide discount codes and other incentives to drive conversion.
  • A logo that serves as your brand's visual identity and creates a consistent look across platforms. You may want to pair it with a designated color palette or other design elements that help build recognition and set you apart from your competitors.
  • A way to track interactions with your target market, such as customer relationship management (CRM) software. These programs help you gather data that supports smart marketing efforts. 

Make a Marketing Plan

Next, you'll need to develop a marketing plan as a blueprint to reach your target audience. Your marketing plan can include any combination of these strategies:

  • Organic marketing, which includes free and low-cost promotional efforts like social media outreach and presence at community events
  • Google marketing, including both search engine optimization tactics and pay-per-click ads
  • Email marketing, such as newsletters and promo code blasts
  • Social media marketing, including both free engagement and paid platform ads through sites like TikTok, Facebook and Instagram

Basically, you want to figure out where your target market spends time online and off, then make sure your brand is showing up in those spaces too (in a positive way, of course).

Set SMART Marketing Goals

In addition to describing your chosen outreach channels, your marketing plan should set monthly, quarterly and annual goals. Return to the SMART framework to ensure you can track your progress. For example, rather than stating "I want to get more clients," your objective would be "I want to consult with at least five potential clients a month for a total of 15 consults in the next 90 days." 

Check in regularly with your marketing strategy to see what works and what doesn't. Tools like Google Analytics let you see when people visit your website, how often they return and how long they stay. Becoming familiar with these metrics allows you to adjust your approach according to audience preferences and behavior. 

The Pros and Cons of Starting Your Own Business

Before you go all-in with your own business, familiarize yourself with the pros and cons of entrepreneurship. Some of the biggest benefits of becoming a business owner include:

  • Freedom to control your own lifestyle. You set your schedule and goals, and you don't have to answer to a manager or supervisor. You're the only one who decides when and where you work. 
  • Making money from your own creativity. If your small business succeeds, you'll enjoy the personal satisfaction of building something sustainable. You can continue to innovate and grow based on your passions and interests. 
  • Financial independence. As your business expands, you can earn more money without the limitations of a set salary. A successful company becomes a valuable asset in its own right, which creates another way to build wealth as an entrepreneur.
  • The ability to leave a legacy. You may want to open a business your children can one day inherit. 

On the other hand, you may have second thoughts if you hit these common snags along the way:

  • Long work hours. You may relish the idea of spending most of your time growing your business, but some entrepreneurs find they prefer a traditional job where they can clock out at the end of the day.
  • Financial risk. You may borrow money or use your savings to start a business, so you're making a significant investment that you'll still have to repay if the company doesn't pan out as expected. It often takes a few years for new companies to become profitable, especially if you have business loans.
  • The stress of being in charge of absolutely everything. You'll need to figure it out as you go as a new entrepreneur, which can be especially challenging as the business grows. 

The Benefits of Using Pay.com as Your Payment Service Provider

Pay.com has a flexible, full-service model that works for businesses of all types and sizes. When you sign up with us, you can choose from multiple ways to take customer payments and accept multiple payment methods, including but not limited to credit cards, debit cards, and digital wallets. 

Partnering with Pay.com brings you benefits like:

  • Level 1 compliance with the Payment Card Industry Data Security Standard (PCI DSS, or just PCI for short). That's the highest possible industry credential, so you'll have peace of mind about the security of every transaction. You can add PCI compliance badges to your checkout page so your customers know they can trust you to keep their data safe.
  • Flexible setup with several ways to accept customer payments. Depending on your business model, you may want to customize your checkout so it matches your brand and creates a cohesive look. If you own a service business, it's a snap to send secure Pay Links that take your clients straight to their invoices. Either way, they'll be able to select their favorite payment method based on the selections you make during account set-up.
  • Intuitive Pay Dashboard that's easy to use for everything from personalizing your account to downloading detailed transaction reports. You'll have everything you need to give your clients an outstanding ecommerce experience, without an extensive learning curve.
  • A full-service payment solution, so you won't need to work with multiple providers and systems. Pay.com offers comprehensive yet affordable services, with transparent flat fees that fit a stretched small business budget.

Click here to get started with Pay.com now!

The Bottom Line: Is Starting a Business Right for You?

Creating a successful business requires a dedicated effort, one that often takes months or even years to become profitable. If you're up to the challenge, you gain the ability to choose your own adventure and decide how you want to spend your time. By following these steps, you can build the foundation for a successful, sustainable company and a fulfilling lifestyle.

Pay.com solves one big piece of the puzzle by providing comprehensive payment solutions. Even if you haven't launched your official website yet, you can accept multiple methods of payment and begin building your endeavor one simple, safe transaction at a time. Click here to create your account now.

FAQs

Can a new business accept credit card payments?

You can accept credit cards almost right away when you sign up with Pay.com. We offer safe transactions with the highest level of industry-standard security. You'll be able to select multiple payment methods and create a customized checkout page that blends in with your business's brand-new website. Click here to find out how you can get started.

Can you start a business with no money?

You can definitely start a business without money as long as you're flexible and creative. To succeed, you'll need to select a profitable niche based on your existing resources. Brainstorm about how your skills and knowledge could solve a problem for a sizable group. It can be as simple as using your awesome project management skills to start a home organization service.

Which business is best for beginners?

The best business ideas for beginners have low start-up costs and high success rates. Ecommerce endeavors work well for many new entrepreneurs. Examples include freelance services like virtual assisting, writing, and social media marketing. Consider your skills and areas of expertise to see how you can use your knowledge to solve problems for your market.

Can I start a startup business on my own?

You don't need anyone else to start your own business. In fact, sole proprietorships are one of the most common types of independent companies. It's easy and affordable to register this type of entity, even if you're new to the business world. When tax time comes, you report your earnings and expenses on your personal income tax return.

Which payment methods should my new business accept?

Accepting a wide variety of payment methods expands your potential customer base. Pay.com makes it easy with support for digital wallets, debit cards, credit cards, and many other options. We comply with the highest level of PCI DSS security standards so every single transaction stays safe from fraud and identity theft.

What is the easiest business to start?

Service businesses tend to be easiest to start from scratch.You just need to select the service you'll provide and begin marketing to your target audience. It's easy to reach community members with social media. You can also post about your services on virtual and online bulletin boards, like at the local library and community center.

What is a cheap business to start?

Any business can have cheap start-up costs when you're marketing your own services. Examples of starting an affordable business that builds on your skills include child care, tutoring, home maintenance services, cooking classes, personal shopping, website creation, photography, and countless other ideas. You may even already have the necessary supplies.

Meet the author
Andrea Miller
Andrea Miller has been a writer and editor for more than two decades. Specializing in business and finance, she has written for some of the major websites in the financial sector. Outside of work, she spends most of her time with her family and enjoys hiking, yoga, and reading.
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