Foundations for Starting a Successful Business
From Idea to Implementation: A Step-by-Step Guide for New Entrepreneurs
Starting a business is an exciting endeavor that requires careful planning, dedication, and a solid foundation. Whether you're launching a small online boutique or looking to offer music lessons out of your home, certain foundational steps are crucial to your business’ success. From setting up accounting systems to building an online presence and navigating legal requirements, here's a guide to help you get started in the right direction.
Choose Your Business Name & Define Your Business Idea
One of the most crucial elements of starting a business is also one of the most fun! Consider the following when naming your business: the similarity to other existing businesses, the availability of a website domain and social media handles, picking something engaging, memorable, and relevant to your product or service, and the ease of spelling it (because we want people to be able to easily recall and search for your business when the need for your product or service arises).
Before diving into the logistics, it's essential to have a clear understanding of your business idea. What problem does your product or service solve? Who is your target audience? What is it that you do exactly, and how does that help people? Use the answers to those questions to craft an “elevator pitch” (30 seconds to introduce your business) so that you can succinctly and memorably explain what you do and why.
Because I started and owned a dance studio for five years, I will often draw on that experience as an example. I could have said to people asking about my business, “I own a dance studio that provides beginning to advanced dance classes to all ages, from three to seventy-three years old, in a wide variety of genres.” That is all true, but it is also true of a lot of other dance studios, and that explanation is not very memorable.
Instead, I said, “I inspire confidence and joy in people of all ages through dance. Our goal is to provide dance classes that are incredible opportunities for personal growth — whether that is checking off an item on your bucket list or trying out a new dance skill — but more importantly, to empower each individual who walks through our doors.” See the difference? Craft a compelling narrative and stand out!
Write a Business Plan
Craft a detailed business plan outlining your goals, strategies, and financial projections. It will allow you to clearly map out the steps you’ll take when starting and running your business to keep you aligned with your plans and goals. A thoughtfully constructed business plan is vital, especially if you want to look for outside funding through business loans or investors. There are eight core elements of a thorough business plan:
- Executive Summary
The executive summary provides a concise overview of your business, highlighting its unique value proposition, target market, competitive advantage, and financial projections. While it appears at the beginning of the plan, it’s often wise to write it last, because you’ll be drawing from the information located throughout the plan.
- Business Description
You’ve already written your elevator pitch, so use that and flesh it out more to detail your business concept, mission, and vision. Clearly explain what your business does, the problems it solves, and the needs it addresses. Highlight how your products or services differ from existing solutions and how they fulfill customer demands.
- Market & Competitive Analysis
Conduct thorough market research to understand your target audience, industry trends, and competitors. Define your target market’s demographics, preferences, and behaviors. Showcase your understanding of market gaps and how your business will fill them. Describe your pricing model, distribution channels, and promotional tactics. This section also includes information about marketing strategies, advertising ideas, or other ways of attracting customers.
- Organizational Structure
This is the who and how of the company. Investors and stakeholders want to know that your business is backed by a capable team. Introduce key members of your team, their roles, and their relevant experience. Highlight how your team's expertise contributes to the success of your venture. (If you’re building a solo business, that’s perfectly okay too—just explain your choice and relevant experience.) This is also the section to outline your legal structure (limited liability company, corporation, sole proprietorship—more on that in a bit).
- Financial Projections
A business plan includes projected income and expenses. Provide realistic financial projections that are based on solid market research and a deep understanding of your business's revenue sources and expenses. While this section may feel daunting because it seems impossible to predict certain financial elements, it is actually a great way for you to think through alternate sources of income that may not have been top of mind, while also planning for expenses that may otherwise have snuck up on you if you weren’t prepared for them.
- Business Strategy
Every business has its challenges. Acknowledge your business's potential risks and challenges and explain how you plan to mitigate them. This demonstrates your awareness of the potential hurdles and your preparedness to navigate them. This is also a great place to address your plans for future growth.
- Investment/Funding Plan
If you're seeking funding or investment, outline your funding requirements and how you plan to use the funds. Be specific about the amount you need, what you'll use it for, and the potential return on investment for your backers.
If you have additional information to share, here’s where you do that. This section can include core team members’ resumes, legal records, business licenses, pictures of your product or service, etc.
Writing a business plan is an iterative process. After drafting your initial plan, take time to revise and refine it. Seek feedback from others. Ensure that your plan is well-organized, error-free, and tells a compelling story about your business's potential.
Choose Your Business Structure
Are you able to fully serve your customers with a simple online presence, or do you need to have a brick-and-mortar business? Many products can be easily and affordably offered through online methods, but some services require a physical location. A brick-and-mortar business is a lot more difficult and costly to set up than an online business, and it typically takes a much longer amount of time to open. That being said, it’s certainly not impossible! Work with a trusted commercial realtor to find a space that fits your business requirements and remember you can negotiate everything about a lease, including rental fees and due dates, along with who’s responsible for which element in the building, parking lot, etc. Sometimes you can even negotiate a lower rent for the first year of your lease in exchange for a higher rate to make up the difference in later years.
Determine the legal structure of your business—sole proprietorship, partnership, LLC, or corporation. Register your business with your state's secretary of state office and obtain any necessary licenses or permits. These steps can usually be done quickly and easily online. Each structure has different legal, tax, and liability implications, so choose the one that aligns with your goals. I highly recommend that you speak with a tax expert or lawyer when making this decision, because every option available to you is differently nuanced, and a choice that’s right for one person may not be right for you and your business. (Although the full discussion on these structure choices is out of the scope of this article, I will mention one extremely important thing to consider regarding liability. If you choose a sole proprietorship, you are 100% liable as the business owner if anything goes wrong. With an LLC, you have certain legal protections that will help you immensely in case of an unexpected event, and you can still choose a sole-member LLC that connects the business’ income/taxes with your own.)
Set Up an Accounting System & Business Bank Account
Accurate financial management is key to a successful business. Choose an accounting system that suits your needs, whether it's traditional software or cloud-based solutions. I love Wave Accounting (most of the features you’ll initially need are free) and have used it for all my businesses over the years. Keep track of income, expenses, invoices, and taxes from the start to maintain a clear financial picture. With Wave, you can also accept payments online through its invoicing option, and pay your staff if you get to that point! Also, open a bank account for your business that is completely separate from any personal finances so that you have clearly distinct transactions. This is extremely important from a tax and liability perspective.
Develop a Marketing Plan & Brand Identity
A well-rounded marketing strategy is essential for attracting customers. Utilize both digital and traditional methods, including social media advertising, content marketing, email campaigns, and search engine optimization (SEO). Tailor your approach to your audience's preferences. For example, if you’re offering a dog-walking service for the elderly, you may want to print some flyers and hand them out in person rather than spend much money on online ads. Not all marketing has to be costly—you can attend networking events, be a guest on a podcast, write a press release, volunteer at a community event, create profiles on Google, Bing, and other business listing sites, create a referral reward system, collaborate with other local businesses to swap and display each other’s cards or flyers—for free or very little investment.
Your brand is more than just a logo—it's the essence of your business. Develop a strong brand identity, including a logo, color scheme, font, and consistent messaging. This helps establish your business's personality and makes it memorable to customers. It will also help guide the way people perceive your business, so it’s smart to do some light research on color psychology when choosing brand colors.
Build an Online Presence
In today’s digital age, a strong online presence is crucial. Create a professional and user-friendly website that showcases your products or services, provides essential information, and offers easy contact options. If you're not well-versed in web design, consider hiring a professional or using user-friendly website builders, such as HubSpot or Wix. If your business is e-commerce-based, look at options like BigCommerce or Shopify to build out your online store and keep track of inventory levels, shipments, etc. When choosing your website address, pick a domain that is as close to your business name as possible (I highly recommend using your business name as your domain for simplicity’s sake and ease of finding your product or service).
Whether you love or loathe it, you’ll also need social media—and you’ll need business accounts for each. You don’t have to be on every platform imaginable (and that is next to impossible to maintain anyway), but you should pick a couple of platforms that are right for you and appeal to your target customers. For example, if you make and sell cupcakes, Instagram, Facebook, and Pinterest are great for showcasing your products through beautiful pictures. If you have a business-to-business (B2B) service, like cleaning offices, then a platform like LinkedIn would be relevant. Consistency is key; post regularly and interact with your followers to foster a loyal community.
One great feature of using HubSpot is that it has a social media planner tool that connects with your business social accounts and allows you to draft, schedule, and then auto-post to multiple platforms at the same time. If you’re using a different website host, consider a third-party integration tool like MeetEdgar, Buffer, or Hootsuite.
Not a graphic designer? Me either! But I love the tool Canva to design quality graphics for my social media (pro tip: you can use Canva to design just about any kind of document, including logos!). You can get a variety of free stock photos and clipart from Pixabay. If you prefer outsourcing some of your more critical designs (like your company’s logo), services such as 99designs or Fiverr offer very affordable, professionally created artwork.
Focus on Customer Service
Happy customers are more likely to become repeat buyers and brand advocates. Provide excellent customer service by addressing inquiries promptly, resolving issues effectively, and valuing feedback. Positive word-of-mouth can significantly impact your business's growth. Utilize all the feedback you get, good and bad, to continue to learn, improve, and grow.
Respond to every review your business gets, whether it is positive or negative. If the review is positive, enthusiastic acknowledgment and gratitude are sufficient. If the review is negative, respond diplomatically while gently correcting any inaccuracies they may have said about the situation. I have found the phrase, “I’m sorry to hear that your experience with us did not meet your expectations,” to be very helpful when you receive an unfairly critical review and do not believe you are at fault. It acknowledges that the person has frustrations, but does not take responsibility for their expectations not being met (because sometimes people’s expectations are outrageous or unrealistic).
Another note on expectations, though: it is mission-critical to be as upfront, transparent, and thorough as possible when establishing a new client relationship. Providing all the information needed for a successful client relationship so that you are both on the same page when it comes to expectations is the number one way to mitigate bad experiences. One restaurant I recently ate at has a very bold statement on its website: “We do not accept reservations. Please come to the restaurant to add your name to the waiting list. We often have waits that last for over an hour. Here are some local things to do and places to explore while you wait…” That was perfect. I was able to appropriately plan for the morning’s brunch plans because they were so clear on establishing the expectations of eating there, and therefore I wasn’t frustrated by the wait because I knew it would happen. I could align my expectations with theirs and had a great experience as a result.
Be Adaptable & Teachable
The business landscape is ever-changing. Be prepared to adapt to market trends, technological advancements, and customer preferences. Regularly assess your strategies and make necessary adjustments to stay competitive. When I first started the dance studio, I had a particular clientele in mind that I thought would be attracted to our classes. It turned out that I attracted an entirely different, untapped clientele and so I adapted my messaging and offerings to their needs. It helped me differentiate the studio from all of its competitors while aligning our mission with our services.
Read business books and listen to business podcasts. Keep learning, growing, and expanding your knowledge. Consider enrolling in an online course that is geared toward helping your particular type of business grow and scale. Reach out to a successful entrepreneur you admire and ask to be mentored or coached.
All That to Say...
Starting a business requires dedication, hard work, and attention to detail. You will increase your chances of long-term success by laying a strong foundation with proper accounting practices, a compelling online presence, effective marketing strategies, and legal compliance. Adaptability and perseverance are essential qualities as you navigate the challenges and triumphs of entrepreneurship. Getting a new business up and running can be daunting at times, but it can also be a great way to earn money while expanding your skills, knowledge, and business prowess. Although I eventually decided to close my dance studio, I would never trade the experience of learning to start, run, and grow a successful business. The lessons I learned from the successes, failures, and stresses of being an entrepreneur are vital to my career today. Whether you turn a hobby into a side hustle or launch a full-scale small business, you will reap the rewards of the experience for years to come.