10 Steps: How to Start a Business From Scratch

A business idea is just the start of a great adventure that can take you to all sorts of unexpected (and gratifying) destinations. Unfortunately, after getting a business idea, too many would-be entrepreneurs get overwhelmed by the steps that come next. What they really need is a roadmap for how to start a business from scratch.

I’ve been fortunate throughout my career to have many chances to see businesses from the idea stage through taking products and services to market — and beyond. Yes, there are many tasks, and the journey is rife with challenges. But there’s nothing more rewarding than pursuing a business idea and turning it into a reality.

Every entrepreneurial adventure is a little bit different, but I’ve found that there are 10 steps you need to take when wondering how to start a small business that can blossom into much more. Follow these 10 steps to start a small business, and remember the embedded tips for staying focused as you pursue your business idea.

1. Honest Evaluation

This is a really difficult but important question to ask when you have a business idea: Do you have what it takes to turn the idea into a reality? A question of this magnitude requires honest evaluation. Let’s be clear: Not everyone is cut out to be an entrepreneur. Some people are much more comfortable playing roles in established businesses and serving as essential cogs in a corporate structure. There’s safety and dependability for the most part in an established business. There’s little safety and dependability when starting a business from scratch.

During this honest evaluation phase, ask yourself a series of questions like:

●     Does your business idea play to your strengths?

●     Do you have the time and energy to stay focused on your business?

●     Can you bear the stress and anxiety at this point in your life?

●     How will you stick with the business when things get tough?

●     Can you sell your idea to investors, to partners, to customers?

And don’t go through this honest evaluation stage in a silo. Ask your friends, family and colleagues past and present what they think about you as an entrepreneur. Make sure they’re being honest with you, too. Anything less than honesty won’t help you make a decision on whether to proceed or not.

2. Get Feedback From Others

If you confirm in the first step that you have what it takes to pursue your idea, it’s time to get feedback on your product idea. Create something as close to a prototype as possible to share with those close to you. If possible, find people who would be ideal clients or customers and share with them, too. Ask for brutal, honest feedback. 

This second step is an important checkpoint. In the first step, you ask yourself: “Am I ready for this?” In the second step, you ask yourself: “Is my idea ready for this?” These are scary questions to ask, because what if the answer is “no”? But these questions are also exhilarating, because what if the answer is “yes”? If you can answer “yes” to these first 2 questions, you know you have something worth pursuing on your hands. And, with enough time, energy, effort, creativity and determination, success is waiting to be discovered.

3. Conduct Market Research

If and when you get good feedback on your product or service, it’s time to conduct deeper market research. This is the point where you go beyond just answering questions. You need to find facts and figures that validate your answers. Facts and figures will be important later as you piece together a business plan, secure partners and seek funding.

Develop answers and find facts and figures for the following questions:

●     Who is your ideal client or customer?

●     Where will you sell? (Locally? Regionally? Nationally? Worldwide?)

●     How large is the target market?

●     How much is your ideal client or customer willing to pay?

●     What level of market penetration will you need for success?

●     How will you market and sell your product or service?

There may be other important questions to ask based on the unique nature of your business. Just make sure that you go big in this phase. This is the step where you try to be as comprehensive as possible.

Here’s a strategy you can use to force yourself to be thorough: Imagine you’re giving an elevator pitch to a prospective investor or client, and try to think through every question they could ask and every objection or criticism they could offer. Make your list as long as possible. And then conduct market research that supports satisfying answers and responses to those questions, objections and criticisms.

This is how you create a bulletproof plan that will resonate with the people you will need for success along the way — investors, partners, clients, customers, etc.

4. Create a Business Plan

You’ve done the heavy lifting in the third step. Now it’s time to formalize all of your hard work as a business plan. What’s the point of a business plan? It’s a document that’s designed to explain what your business is, how your business will operate, who your business will serve, and how your business will ultimately find success. It’s something you could easily hand to a banker from whom you’re seeking a loan or a client that you want to sign a contract for service.

Business plans have a bad reputation as assets that are often poorly created and rarely read. That might be true in many cases, so make sure your plan includes relevant information while remaining brief and readable. Focus most of your time and energy on:

●     Value proposition: How does your product or service create value in the lives of your potential customers?

●     Management team: Who will guide your business to success? (In many cases, management team members with successful backgrounds in launching new products can help secure funding.)

●     Market analysis: Quantify the available market and the competition to demonstrate the opportunity in front of you.

●     Financial projections: This is highly important when seeking funding. Lenders want to know when you are going to start turning a profit — and when they can recoup their investment with interest. Be optimistic and aggressive without being unrealistic.

Your business plan may include other important sections depending on the nature of your company and its products or services. Just keep in mind that a business plan is designed to persuade busy people that your company offers promise. If you can use a business plan to persuade readers that your business will be successful, you will start collecting allies for your journey.

5. Find the Right Partners

One of the best decisions I made when first starting was securing the right partners. Specifically, I found a good accountant and a good lawyer to help me create the proper business structure and create the right paperwork. These are foundational things that your business requires, and things that get much more difficult to fix down the road if done incorrectly at first.

Creating the right structure and paperwork also forces you to make important decisions early in your company’s lifespan. Will you go solo as an entrepreneur? Do you need to bring in official partners with equity stakes? There are pros and cons to every structure. Spend some time thinking about what will best support your business goals, and lean on your attorney for guidance.

You may balk at the upfront costs of using accountants, attorneys and other professionals at first. But their advice, guidance and services are worth their weight in gold as your business starts to ramp up.

6. Lineup Funding

You may have enough money in the bank to launch your business without help from anyone. And that’s wonderful. You’re free to explore your business opportunity without constraint. But many people need a source of funding as they explore how to start a business from scratch.

The goal should be to get one year’s worth of funding. This gives you enough of an on-ramp to pursue your opportunity. You’ll know after a year whether or not it’s worth continuing. If you don’t have first-year funds in the bank, there are multiple other sources.

You can always look to friends and family to serve as early investors in your startup.

Banks don’t always loan to first-time entrepreneurs, but they might provide you with some funding. Even if they don’t, reach out to a banker and start developing a relationship. You may be able to secure a loan or line of credit later down the line once your business is more established, and you’ll want to have a relationship in place for that moment.

You can also seek out investors who specialize in early-stage businesses. These are investors who invest in 10 companies knowing that it won’t work out 9 times. But that 10th business and the return it provides is going to outweigh the losses of all the others.

Finally, you can also use technology as an avenue to seek out crowdfunding. This remains a niche way to secure funds for a new business, but you might find people responsive, especially if your business is missional in nature.

A final thought on funding: Anyone who gives you money for a business isn’t really investing in your company. Rather, they are investing in you. So treat the search for funds like a job interview. You want to be as impressive, as personable, as thoughtful, and as qualified as possible. Make lenders and other sources of funds confident that you are the perfect person to make your business idea a wild success.

7. Register Your Company

This is a mundane step, but you’ll need to formally register your company in the country where it is located. This is something that an attorney can likely help you with. And this step also delivers some benefits.

First, you’ll need a tax ID to access business services through a lot of vendors. For example, to get a business bank account, you’ll need to demonstrate that you have an official business.

Second, you enjoy tax benefits as a business in many countries. For example, many countries let you carry over business losses in your early years to subsequent years when you turn a profit. This helps lower your profit on paper and reduce your tax burden. As noted above, it’s best to find a good accountant who can help you navigate your taxes.

Finally, registering your company may also give you access to government programs that are designed to help entrepreneurs. For example, many governments offered special programs for businesses during the COVID-19 pandemic to help sustain companies during a challenging time.

8. Build Your Team

You may be able to bootstrap your business and get things up and running on your own. Eventually, though, you’ll need to hire if you want your business to scale and reach its full potential. You may need only freelancers and contractors early on, or you may need to bring on full-time employees.

As you hire, think about your own areas of weakness. You should spend the bulk of your time focused on what you do best — the things you can do and like to do that will move your business forward. Then hire others to take care of the tasks that you’re not as good at or that you don’t enjoy as much.

Spend more time than you think you need to spend on hiring. It’s far better to spend months and months searching for the right candidate than to rush through a hiring process in just weeks — only to end up with someone who can’t do the job.

9. Build Your Brand

Your brand is essential to your company’s survival. Start marketing and selling your brand in whatever ways you think will drive the most opportunities and the most revenue. And there’s no shortage of brand-building tactics to pursue. Here are just a few of your options:

 ●     Content marketing: A website serves as the front door for many businesses in the 21st century. Create one and then start adding content (blog posts, case studies, etc.) that demonstrate your expertise to visitors.

●     Social media: People are talking about your industry on all sorts of social media platforms. Join the conversation and start establishing yourself as an expert in your space.

●     Networking: You can never have enough people on your side. Invest time into networking and you’ll start developing a sea of supporters who drive new clients and customers your way.

●     Events: Trade shows and conferences are great venues for making connections and developing new business opportunities.

●     Advertising: Once you have the capital to support it, start advertising your business. Start with pay-per-click ads that put your website at the top of result pages on Google and other search engines.

Don’t expect brand-building to be an easy task. This is hard work. Nothing is going to come easily. But the work you’ve put in during earlier steps, your determination and your belief in your business will continue to drive you toward success.

10. Build Your Revenue

One day, you have an idea and start wondering how to start a business from scratch. Then you dive into the hard work of making that business idea a reality. And, hopefully, you put your head down for a few years only to later realize that you’ve reached all of the business goals that you envisioned when the idea first came to you.

And that’s how it’s supposed to be. When you’re willing to follow the steps outlined above, and when you’re willing to put in the hard work needed to take on and overcome daily challenges, there’s nothing to stop you from slowly building revenue — and building a business that you can be proud of.

Need Support Starting Your Business?

I know what it’s likely to struggle with turning a business idea into a reality. It’s a long, hard journey — but it’s one that is ultimately so rewarding. You may be wondering how to start a business from home, or you may be wondering how to take your existing business to the next level. No matter what you’re struggling with, I’m always here to help. Get in touch anytime to share your business ideas and struggles. I would be glad to help in any way I can.