Start Your First Business in 5 Steps

This article was provided by Alyssa Strickland of Millennial-Parents.

According to statistics, about 20% of new businesses fail in the first year. When you are starting your first business, choosing a business that is relatively easy to start may be a good idea. However, “easy” is a relative term. These five steps will help you choose what type of business you want to run and get it started.

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1. Consider Easy-to-Start Business Ideas

What makes a business easy to start? First, it helps to choose an industry that either you already know a lot about or that doesn’t require a lot of advanced knowledge or specialized skills. If you have been working in the same industry for 20 years, starting a business that capitalizes on your job experience may make sense. If you just graduated college, then something related to your major can be a good choice. If you have a hobby or a passion that you can turn into a money-making idea, consider doing that. 

2. Research Whether You Can Make Money With Your Idea

Choosing a business you want to and feel qualified to run is the first part of the equation. The second is determining whether you can make money running that type of business. For this step, do market research. Determine how much demand there is for the products or services you plan to offer. Figure out who your customers are and whether they will pay enough money for your products or services for you to make a profit. Find out where your customers live and whether you have an available channel to sell to them where they are. Research how many other businesses are already providing similar products and services. 

3. Write a Business Plan

Your business plan is like a roadmap that explains how you plan to take your business from where it is to where you want it to be. It is a good tool for organizing your plans and also useful for obtaining financing. A traditional business plan starts with a summary of what your company is and why it will succeed. Include your mission statement, what you are selling, and basic information about your business. The rest of the plan contains more detailed information about your company, your market analysis, how your company is organized and managed, your products or services, your marketing and sales strategy, your funding requirements, and your financial projections.

4. Register Your Business

Registering your business makes it a distinct legal entity separate from yourself. To do this, you must choose a business structure. Forming a limited liability company provides you with protection for your personal assets. It is more flexible and requires less paperwork than forming a corporation and provides you with tax benefits. The requirements for forming an LLC vary by state. An attorney can help you with following the regulations, but using a formation service may save you time and cost you less money.

5. Get Funding

Some types of businesses don’t require a lot of startup funds, but you still need money to get your business started. You may be able to use your personal savings. Other sources to consider include friends and family, business loans, crowdfunding, and investors. 

Starting any business requires time, effort, and money. However, some businesses require more of all three than others. By choosing wisely, you can give yourself a better chance to succeed with your first attempt. 

This article was provided by Alyssa Strickland of Millennial-Parents.

UPDATE: Looking for more help with #3? Check out this six step guide to writing a great business plan.