What Are the Steps to Starting a Small Business?

Startup Sunday
 
For the last three weeks, I've been working on a project that involves talking to dozens of entrepreneurs, venture capitalists and educators about the steps to starting a small business and encouraging entrepreneurship. As you might imagine, it's been quite illuminating!

It's also reminded me why I took the often-scary, difficult steps to starting a small business myself. I am fundamentally an optimistic person who sees opportunity where others may see tall walls. I also love the constant challenge and reward of being an entrepreneur. This week has been an especially fulfilling one for me: I was at the White House on Wednesday, published in the Washington Post Magazine today and tomorrow am scheduled to appear on one of my favorite NPR programs: Tell Me More. This is the kind of week I dreamed about when I first went out on my own, and I suspect it will keep me going through the inevitable challenging moments ahead.

As I've built my own business, I've developed my own unique perspective on entrepreneurship. I'm sure there are some elements you may disagree with, but I hope you find some useful nuggets of information for your own life and work. Here's my take on the steps to starting a small business.

First Step to Starting a Small Business: Understand Yourself and Your Idea

I used to say that I could never be a solo entrepreneur because I didn't have the discipline. Boy was I wrong! Instead, I have become a workaholic. So I conclude that the first step to starting a small business is to understand yourself and your motivations. As yourself questions like:

• Do I have the entrepreneurial mindset?
• Is there demonstrated potential for sales of my service or product? Do I have the resources to survive the start-up stage?
• What is my market niche?

Second Step to Starting a Small Business: Conduct Market Research

In the past, I've written about how you can become an entrepreneur in three days. I still think it's possible for many solo professionals to launch on a very short timeframe, and it's a good way to test-run a business idea.

But at some point early on, you must conduct market research to build a solid foundation for your business. This can be as simply as networking with other business owners, consulting the Small Business Administration resources in your area and calling potential customers to feel out the market opportunities.

Be careful to avoid the top three networking mistakes, though, or they may come back to haunt you when you are further down the road in your venture.

Third Step to Starting a Small Business: Develop a Financial Plan

One of the biggest questions I get from aspiring freelance writers is how much to charge. In fact, this is an issue that I still face as I continually refine my pricing and goals for new business. To launch, you need a solid financial plan, based on your market research, but you should also adapt the financial plan and how much you charge as you get new information, such as your actual sales and income once you've launched.

Make sure to consider all the different revenue streams available to you in your field. If you have a physical property, think about advertising on your storefront or partnering with other local business who may want to display brochures in your store. If you're selling one product to your customers, ask them what else they need and what it would take to satisfy them. You may discover an unmet need that you could fill by introducing another product or service line.

Fourth Step to Starting a Small Business: Sales and Marketing

As I interviewed entrepreneurial experts around the world in the last few weeks, one common theme I heard is that successful small business owners excel at sales and marketing. It's a good thing, because this is the cornerstone of your venture.

Sales and marketing shouldn't be some foreign, uncomfortable behavior. If you believe in your product or service, it's as simple as communicating with potential customers about their needs and how you can meet them. Look at selling yourself as a natural outgrowth of delivering excellent value.

And these days, any marketing plan must include social media: blogging, Facebook, LinkedIn and Twitter for small business. These are important avenues of communication to colleagues, clients, experts in your field and other small business owners. Just please, avoid the blunders of the social media newbie!

Let me what you think of these steps to starting a small business! It's not a comprehensive list, but I think that I hit the highlights.

Photo by Ctd 2005 via Flickr

Comments

[Foiledcupcakes]

Hey - glad to find this post! Love that you're so focused on the self-evaluation, planning, and strategizing. So much of what we do as moms, based on the fact that we're pulled in so many directions, means that it's hard to find the time to even start with step 1 - finding out what we love to do or what we're skilled at - and this is a great map for those who think they may want to give it a shot.

I'm gonna throw in there a few more things, based on my own experiences, as well:
1 - Networking. A huge part of my current entrepreneurial venture (Foiled Cupcakes, http://www.foiledcupcakes.com, Chicago's only online order and personal delivery cupcake service) is rooted in the relationships I've built OUTSIDE of working from a home office. All of our employees are virtual, but as a full-blooded entrepreneur, I crave interaction daily with people who are in the same boat as I am. Building these relationships via networking means that you'll also get the word out quickly.
2 - Trying things out. As a mom, I know it's tough to risk something to see if it'll fly. But I have found that if I just plan and plan, nothing happens. I have to actually test something and then evaluate it post-throwing-it-out-there. Otherwise, how will I gain any confidence that what I'm thinking is AWESOME is actually AWESOME (or that it sucks?)
3 - Get the support of loved ones. Entrepreneurs work a lot. It's in our blood. As much as we don't want to, most of us are workaholics. So we have to find support - from friends, family, neighbors - to help with kids, to remind us of our priorities, to get an occasional night to promote our companies, etc. There's no way I could have started three companies without the support of my family and friends. I'm so fortunate!

Alright, stepping off my soapbox and looking forward to what other people have to say about this. Happy business-starting!

[Stephenie O]

"Look at selling yourself as a natural outgrowth of delivering excellent value." Good advice, Katherine. I'm making that today's mantra.

[Invoice factoring]

One of the biggest mistakes start ups make is to assume a lot of people will want to buy a particular product or service, because the business owner likes the ideas or knows one or two people who want the product or service. To minimize your risk for loss, never assume there is a market. Research the idea. Talk to real potential prospects to find out if what you want to sell is something they'd be interested in buying, and if so, what they'd pay for the product or service.