Starting a business can be intimidating and exciting all at the same time. It’s like starting a journey that will take you through many twists, turns, and obstacles (but also hopefully rewards).
There are so many things to do in the beginning that it can feel overwhelming. But don’t fret because we’ve created this checklist guide to walk you through the very first steps of starting any new business.
If you want to know how to start a business, then you are in the right place.
Steps on How to Start a Business
These tried and trusted steps will walk you through everything from A to Z of the essentials of how to start your own business.
Step 1: Come Up with an Idea
Our first step is to figure out what kind of business you want. Whether online or off, there are many ways of generating revenue.
There are also many ways for businesses to fail. But these failures are almost always due to not understanding the market or how the business fits into it.
Businesses succeed when they provide products and services that other businesses (and consumers) need. To find success in an area that interests you, take some time to research the market and try to understand what it needs and how you can fill that need.
For more information on how to start a niche business, like how to start a woodworking business or how to start a carpentry business, check out our articles.
Step 2: Write Down Your Business Plan
It can be a little overwhelming to think about starting your own business. There are a lot of things to consider, and you may not even know where to start!
While it’s true that the idea of starting a business and writing a business plan at the same time might seem like too much work, writing a business plan as the founder can help you think through all of your ideas methodically, crystalizing the entire business-conception process.
Here is a list of sections you can work on when working on your business plan:
- Logistics plan
- Business plan outline
- Company name
- Management and organization
- Products and services
- Customer segmentation
- Marketing plan
- Financial plan
- Market analysis
Step 3. Secure Financing to Fund Your Business
Funding your startup could be a pain in the neck, especially if you have limited funds. Before coming up with a figure of how much you need, make sure to consult your business plan.
Here are some ways you can generate funds for your business:
- Investors
- Business loans
- Business grants
- Crowdfunding
Step 4. Choose a Business Structure
Choosing the right business structure is way more important than you probably think it is. It can protect you from a legal standpoint, provide you with tax benefits, and create more flexibility for your business. But with all of these types of structures out there, how do you know which one to choose?
Common structures include sole proprietorship, limited liability company, and corporation. Adhere to your chosen business structure after you make up your mind about the one you want. This is very important to the process of starting a business.
a. Sole Proprietorship
A sole proprietorship means that there’s only one owner of the business, and that owner is responsible for all debts and liabilities.
The owner has complete control over the business—and its profits. In addition to being personally liable for the business’s financial obligations, the sole proprietor will also be responsible for taxes incurred by their company, as well as any legal action taken against it.
Sole proprietors can hire employees, but they’ll need an employer identification number (EIN), which means registering their business entity.
b. Limited Liability Corporation
For many small businesses, the limited liability corporation (LLC) is an ideal option. It provides liability protection for the business owners, so you are not financially responsible if legal claims are brought against your business.
An LLC can be formed by one or more owners, who then choose a name for the business and draft an operating agreement that outlines the roles and responsibilities of each owner within the company.
c. Corporation
A corporation is a business structure that is its own legal entity, separate from the owners of the business. Shareholders own the business and each has a slice of the company’s ownership.
Corporations normally enjoy the benefit of limited liability, meaning that in case of financial loss, the personal finances of the owners cannot be seized to pay for it.
In addition, corporations can issue stock, which enables them to raise capital by selling ownership shares in the company. The benefits of a corporation are normally enjoyed by large, multinational corporations.
Step 5. Get Tax ID Numbers
The tax ID number, alias a Business Number, is part of the 15-character program account number assigned to businesses by the Canada Revenue Agency (CRA). This is important if you are working on starting a business. The program account number has three parts within it:
- Four-digit reference number for the program account
- Nine-digit Business Number that identifies your business
- Two-letter identifier for the program type
For more information, find out from the Canada Revenue Agency.
Step 6. Business License and Permits Have to Be Gotten
An important step in going about starting a business is to understand the different licenses and regulations you need to operate legally.
There are many different types of licenses and regulations that you may need, depending on your industry. For example, if you are in the food industry, you will need a food handler’s license. If you are in the construction industry, you will need a contractor’s license.
You have to find out what licenses and regulations apply to your business type. You can do this by contacting the authorities or by doing an internet search. For example, “licenses for [your type of business]”.
For more information on how to start a business, like how to start a cleaning business or how to start a car rental business, check out our articles.
Step 7. Open a Business Bank Account
Opening a business bank account is a necessary step when going about how to start a business. It will help you keep your personal and professional finances separate, which can make doing your taxes much simpler and can help you automate some of the tasks that come with running a business.
The first step to opening a business bank account is to find an institution that offers the services you need. You should look for an institution that has low fees, good customer service, good credit card deals, and offers the type of accounts you need.
Check out our article on the best business credit cards in Canada for more information.
Step 8. Get Business Insurance
Insurance is necessary for any serious proprietor that is in the process of starting a business. It protects your company from financial loss in the event of an accident or disaster.
Every region has different laws and requirements when it comes to insurance, but even if your region doesn’t require it, it’s a good idea to get some.
Step 9. Prepare Software
Software is a great way to streamline repetitive tasks. It can be used for anything from managing your finances and overseeing taxes to automating your social media marketing.
There are many different types of software that can be used for business. Some of the most popular ones are CRM, project management, and accounting software.
However, it is important to be careful when deploying software when starting a business. Some tasks can only be optimally performed by humans, so know when and when not to depend on software.
Check out our article on which free tax software in Canada you could use.
Step 10. Marketing
In today’s world, branding has gone way beyond just a name. Now, perception and relatability matter. As a result, companies are going over and beyond to make sure that every area of their brand is worked on and all loose ends are tied.
Such areas of focus include designs, logos, signature toes, house styles, and brand positioning. Your online presence also matters, which is why social media accounts and websites can also play important roles. So, factor this in when putting together your plan for starting a business.
Conclusion
Learning how to start a business is more than a worthy cause, but without a detailed game plan, your efforts can easily end in failure.
Our checklist provides you with common tasks that are usually the first to crop up when starting a new business venture. Study this list thoroughly, and don’t be afraid to ask questions about things you do not understand.
There are no stupid questions when it comes to running a business. If a question is holding you back, eliminate it as soon as possible. And remember: your success could depend on it.
How to Start a Business FAQs
How to Start a Business with Little or No Money?
There are plenty of businesses that require little to no startup capital, like freelance writing or social media consulting.
You can gather funds by setting aside money from your paycheck each week or through crowdsourcing platforms like Kickstarter.
If you have an idea for a business you want to launch, work on developing skills related to that idea while still maintaining your day job.
Once you’ve decided on your business idea, do market research to see if there is a need for it in the market. If there is not enough demand for your product or service, then it’s probably not worth pursuing the venture.
Once you’ve established a viable market opportunity, start thinking about how much money it will take to launch your business and where that funding will come from.
When Is the Best Period to Start a Business?
There are several reasons why timing can make or break a startup. Your timing will be affected by:
The Seasons: If you’re launching a seasonal product or service, you should schedule your launch around a quarter before the busiest time of year for your industry.
For example, if you sell Christmas trees, you should open up shop in October. If you’re a landscaping company, you should plan on opening your doors in late winter to early spring.
Your Personal Life: You want to prepare yourself for the stress of launching your own business and getting it off the ground.
This can be difficult if you have other priorities in your life. If you’re planning on starting a family, getting married, or moving houses in the near future, you may want to wait until those events are over before launching your new business venture.
Your Cash Flow: The costs of starting and operating a business can add up quickly. Before launching your new company, make sure that you have enough cash flow to sustain it.
Hi, I'm Adeola Adegoke. I am a licensed Insurance Broker in Manitoba, and I hold a master’s degree in Mathematical Sciences (with a major in Financial Modeling) from the African Institute for Mathematical Sciences (AIMS), Tanzania.
Also, I have a second master's degree in Statistics from the University of Regina, and I am currently pursuing my Ph.D. in Statistics at the University of Manitoba.
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