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How to Start a Business

Getting to do what you love, on your own terms, while making your own income and setting your own hours . . . yeah, the idea of starting a business sounds amazing!

Until, that is, you start to think about all the nitty-gritty details. Then, your dream of starting a business can quickly start feeling like a nightmare.

It’s okay. Take a deep breath. People start successful businesses all the time. And if you’re willing to put in the work, you’ll be next! These six steps will show you how to start a business.

How to Start a Business in 6 Steps 

Here’s a quick overview of the six steps to starting a business:

1. Determine your why. 
2. Create a business plan. 
3. Make it official.
4. Plan ahead for taxes.
5. Develop your brand identity and marketing plan. 
6. Remember that starting a business takes time.

1. Determine your why. 

Before we get tactical on how to start a business, the first question you need to answer is, Why am I doing this? Think of your why as the engine that will keep your small business moving forward on days when it gets hard.

Don't lead your business alone. Apply for an Advisory Group.

And trust me, it will get hard. Data from the Bureau of Labor Statistics shows that about 50% of small businesses fail by their fifth year.1 Yeah—kind of depressing. But on the other hand, that means 50% of small businesses are still successful by their fifth year!

What separates the owners who make it from the owners who don’t? Knowing their why.

I had a front row seat to watching my mom start, run and grow a successful cake-making business. Now, in her mid-60s, she’s still making cakes. When she has a stressful day and vents to me about being bogged down with orders, sometimes I ask, “Mom, why do you still do it?”

She always replies, “Because it matters to the families who have gotten their cakes from me for over 30 years. It matters to that bride who will never forget her wedding day. I’m not just making cakes. I’m a part of some of the most special, important and remembered moments in someone’s life. That’s why I still do it.”

Bottom line: Running your own business is a roller-coaster ride, so you’d better love what you’re doing (and truly believe in it) if you’re going to survive the ups and downs.

2. Create a business plan.

Once you have your why, it’s time to start planning. Don’t worry—I’m not asking you to write a college textbook here (unless that sounds fun to you!). Just start by answering these questions:

  • What product or service will you offer? As you’re creating your product or service, ask yourself a simple question: What problem am I solving? Successful businesses help solve specific problems. Are you helping busy working professionals through a meal prep service? Or are you making handcrafted baby blankets for people looking for a memorable gift? If you want a great product or service that sells, focus on making your customer’s lives better.
     
  • What schedule will you work? One of the perks of being a business owner is having a flexible schedule, but you also need to be realistic about what works best for your business. For example, if you’re opening up a bagel shop, you’re probably not going to be very successful if you choose to sleep until noon and open up shop in the evenings. But if you’re selling jewelry in an online Etsy shop, then by all means, hit the snooze button!
     
  • What will your budget be? Creating a business budget will help you avoid horrible financial mistakes and give you peace of mind. Chances are high that your business isn’t going to start making money right out of the gate, so the last thing you want is to dig yourself into a financial hole by spending money you don’t have. Plus, knowing your budget will also help you figure out . . .
     
  • How much will you charge? Setting the right price is critical to your profitability, marketing ability and overall success in business. Do some market research to set prices that are reasonable for your customers while still being profitable for you.
     
  • What will your policies be? You need policies for both standard and unexpected events—like shipping, returns and cancelations. It’s a good idea to set these policies before launch day so you can protect yourself and your business. Also, make sure to communicate those policies to your customers in simple language, whether that’s in person, on your website or through email.

3. Make it official. 

Don’t keep flirting around with your business idea with no commitment in sight. It’s time to slap an official label on it! Here’s what you’ll need to do:

  • Get a business license. A business license isn’t even that big of a commitment—it costs around $15, depending on where you live (talk about a cheap date!). A quick Google search for your state’s licensing information will help you figure out how to register your business.
  • Choose your business entity. Enti-what? Choosing your business entity is simply about deciding the type of business you’ll run. Here are your options:

Sole Proprietorship: This is a small business run by one person that’s simple and inexpensive to set up. You report your business financial records on your personal tax return. The downside is that you are personally liable if the business is sued. But overall, if your busines is simple and low risk, this is the option I recommend.

Partnership: This is a business you start with someone else, or a group of other people. As a general rule, I don’t recommend partnerships. There’s just too much risk involved, and you might end up in a complicated business breakup down the road. 

Limited Liability Company (LLC): Getting an LLC means you’re creating a business that’s legally separate from you. While an LLC isn’t necessary for most small businesses, you’ll want to consider one if you have a high-liability company (for example, you teach horseback riding) or you have a lot of assets to protect.

Corporation and S-Corporation: These are more sophisticated business structures for more established companies. If you’re expecting to scale significantly, have a conversation with a tax professional about when it’s the right time to create a corporation or s-corporation. 

  • Open a business checking account. Separate your personal and business checking accounts as soon as possible. It’ll save you tons of stress when it comes to accounting and taxes. You can list a business checking account under your name and Social Security number. For example, the account could be named: Jane Doe, DBA (Doing Business As) Jane Doe Dog Walking. All cashflow for your business—in and out—should happen through this account.
  • Get start-up money. When it comes to start-up money, here’s the most important thing you need to know: Don’t go into debt to start your business. It won’t end well! You might need to take on some extra work in the early days of your business before you launch. Pay with cash as you go and grow slowly. The risk of debt simply isn’t worth it.

And while we’re on the subject of money . . .

4. Plan ahead for taxes.

Okay, we know tax talk can make some people get glassy-eyed, but understanding your tax requirements as a small-business owner is super important, so don’t skip over it.

Just like employees, all businesses need to file annual tax returns. And as a small-business owner, you’re responsible for paying income taxes (at your own personal income tax rate) and the self-employment tax (a 15.3% tax that covers your share of Medicare and Social Security taxes).2

Here’s where it gets a little tricky: Legally—if you expect to owe $1,000 or more in taxes in a year—you’re supposed to file and pay your taxes throughout the year. These are called quarterly taxes (or estimated taxes). That’s why we recommend you set aside 25–30% of your income from each paycheck—so you’re not blindsided by a huge tax bill when it’s time to pay up. Oh, and if you’re late on a payment, you’ll be hit with penalties each month that could go as high as 25% of your unpaid taxes.3

So, for example, if you bring home $2,000 in net profit from your business (after expenses), you should set aside $500 to $600 of that money in a savings account created specifically to pay your taxes. That should take care of most—if not all—of your tax bill!

Another thing to note: If your small business is going to have any employees, you’re going to be responsible for payroll taxes (aka employment taxes) on your employees’ wages.

As a general rule of thumb, be smart about what you’re doing with your money—and don’t try to outsmart Uncle Sam. Everything you do now can (and probably will) affect you later. To avoid any slipups, get yourself a tax professional—one with the heart of a teacher—that you can trust.

set aside money for taxes

5. Develop your brand identity and marketing plan. 

After figuring out your finances, it’s time to shout about your business from the mountaintops! Get ready to start a conversation with your customers by working on branding and marketing.

Work on Your Brand Identity

Your brand is your business’s personality. As you develop your brand, think about the experience you want your customers to have whenever they interact with you. What do you want your business to look and feel and sound like? What words do you want people to use when describing your brand?

Everything—from the colors on your website to your copy (the language you use in advertising) to the design of your products and services—should reflect a consistent brand experience for your customers.

Creating a Marketing Plan

Marketing is simply a conversation you have with potential customers. It’s getting to know them, telling your story, and sharing what you have to offer. Here are a few basic marketing assets to start creating:   

  • A website
  • Social media accounts
  • An email list
  • In-person events and promotions
  • Free content to promote your business

Marketing doesn’t have to be expensive—it just takes intentionality and consistency. And keep in mind that people buy from people they know, like and trust. Marketing is your opportunity to get people to know, like and trust you.

6. Remember that starting a business takes time. 

Hey, it’s hard to start a business, and it’s hard to keep it up and running while you’re in the trenches. That’s why it’s so important to stay motivated and keep learning. I invite you to check out The EntreLeadership Podcast, which features some of the best motivators and educators in the business of business!

And for you ladies who are serious about starting a business—join the movement of women in the trenches of small-business ownership at my Business Boutique Conference! It’s going to be full of inspiration and actionable advice from incredible business experts—like Dave Ramsey and Jasmine Star—who are going to teach you how to survive and thrive as an entrepreneur. Can’t make it to Nashville? No worries—you can snag a livestream ticket and watch from wherever you are!

For the complete plan on how to start or grow a business and make money doing what you love, pick up a copy of Business Boutique.

Christy Wright

About the author

Christy Wright

Christy Wright is a #1 national bestselling author, personal development expert and host of The Christy Wright Show. She’s been featured on Today, Fox News, and in Entrepreneur and Woman’s Day magazines. Since 2009, Christy has served at Ramsey Solutions, where she teaches on personal development, business and faith. Learn More.

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