How to Start a Business: 6 Questions to Ask

Starting a business can quickly feel overwhelming when you consider all the details. Where do you even start? First, take a deep breath. Yes, you'll need much more than a good idea, but you don't have to figure everything out at once. 

 

Here are six questions to help you turn your idea into a real, sustainable business. 

Before we get tactical about starting a business, answer this: Why am I doing this? Getting started will come with setbacks, slow seasons and plenty of days when things don't go according to plan. A clear reason for starting the business can help you stay focused when things get hard. Think of your why, your mission, as the engine that’ll keep you moving forward.

That's important because business success is a long game. Your goal isn't to grow overnight. It's to build something solid enough to keep serving customers and improving year after year.

Between 1994 and 2022, nearly 68% of new businesses survived at least two years. About half made it five years, and a third were still in business after 10 years.¹

Here's the encouraging part: Once a business makes it through those early years, the likelihood of it continuing to operate goes up. Nearly 70% of businesses that reach five years go on to reach 10, and 76% that reach 10 years make it to 15.²

In the beginning you'll serve as chief everything officer and deal with plenty of unexpected challenges. But knowing your why and believing in the mission will help you keep showing up and solving problems so you can build a business you love. 

At its core, a successful business solves a problem people are willing to pay to have solved. Maybe you offer meal prep for busy professionals, bookkeeping for small-business owners, or handmade products for people looking for a meaningful gift. Start by considering your customers. What do they need, and how will your business make their lives better? 

Once you've identified the problem you're solving and the customer you're serving, work through the practical details. 

What will your schedule look like? 

A perk of being a business owner is having a flexible schedule, but you also need to be realistic about what your business requires. For example, if you’re opening a bagel shop, you won’t be very successful if you sleep until noon and open up in the evening. 

What’s your business budget? 

Creating a business budget will help you avoid major financial mistakes and give you peace of mind. Chances are your business won’t make 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. 

How much will you charge? 

Setting the right price and asking yourself other product questions is critical to your overall success. Do some market research to set prices that are reasonable for your customers and still profitable for you. 

What policies will you need? 

You need policies for both standard and unexpected events, like shipping, returns and cancellations. Set these policies before launch day to protect yourself and your business. And make sure to communicate those policies to your customers in clear, straightforward language (whether that’s in person, on your website, or through email).

When you’re ready to launch, it’s time to make this thing official. Here’s what you’ll need to consider.

Do you need a business license?

Consider a business license as your permission to “pass go.” Requirements and fees vary depending on where you live, what your business does, and other factors. Check your state and local government websites to find out which licenses and permits apply to your business.

What business structure will you choose?

Your business structure affects how your business is organized, how you're taxed, and what legal protections may be available. The right choice depends on your business, risk, income, ownership and tax situation. Talk with a qualified attorney or tax professional before making the decision. 

Structure	Basic Idea	Common Consideration
Sole proprietorship	One owner (business and owner aren't legally separate)	Simple, but personal liability generally remains
Partnership	Two or more owners	Requires clear agreements and creates shared responsibilities/liabilities
LLC	Separate legal entity with flexible management/tax treatment	Can provide liability protection, subject to laws and circumstances
Corporation	Separate legal entity designed for more complex ownership structures	More formal requirements
S corporation	A tax status/election available to eligible businesses	Can have tax implications and additional requirements3

Should you open a separate business bank account?

Open a separate business bank account as soon as possible. Keeping business and personal finances separate makes it easier to track cash flow, manage your books, and prepare for tax time. If you're operating as a sole proprietor, you may be able to open a business account using your Social Security number. Requirements vary, so check with your bank about what documents you'll need. 

Plan for start-up costs.

When it comes to start-up money, here’s the most important thing you need to know: Don't let the desire to look like a big business tempt you to spend like one. More specifically, don’t go into debt to start your business. A new business comes with uncertainty, and you don't need the extra pressure of monthly debt payments. So start as lean as possible, keep overhead costs low, and grow at the speed of cash. You might even need to take on some extra work before launching so you can fund the business without debt.

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

Tax talk ranks right up there with reading terms and conditions of a legal agreement. But ignoring your taxes is expensive. Before you start bringing in revenue, understand tax requirements and make a plan for tracking your income and expenses, setting aside money for taxes, and making any required payments.

How do small-business owners pay taxes?

Unlike employees who have taxes withheld from each paycheck, many self-employed business owners need to make estimated tax payments throughout the year. Your tax bill can include federal income tax, self-employment tax, and possibly state and local taxes.⁴

The amount you'll owe depends on your business and financial situation, so don't guess. A qualified tax professional can help you understand your obligations and determine how much to set aside. 

Setting aside money for taxes as you earn it helps keep you from being blindsided by a huge tax bill. Create a separate savings account for your tax money and move a portion of your business income into it regularly. 

If you have team members, you'll need to understand your responsibilities for payroll and other employment taxes. 

As a general rule of thumb, don’t try to outsmart Uncle Sam. Get the right help, keep good records, and plan ahead. Your future self, and your bank account, will thank you. 

After you figure out your finances, it’s time to develop your brand identity and marketing plan. You can have a great product or service, but it won't matter much if nobody knows it exists. That's where marketing comes in. Some people think marketing is about shouting your business from the rooftops and spending a fortune on ads, but that's not true. Good marketing is about understanding your customers and showing them how you can solve their problems. Consistently give them a reason to choose you. 

What is your brand identity?

Your brand is the experience and reputation you build with your customers. As you develop your brand, think about the experience you want your customers to have when they interact with your business. What do you want your business to look, feel and sound like? How do you want people to describe your brand?­­­­

Everything—your website, social media, emails, customer service—should communicate who you serve, what you do, and why your customers should trust you.

How will you reach your customers? 

Marketing is simply a conversation you have with potential customers. It’s about getting to know them and sharing your story and what you have to offer. Here are a few ways to reach potential customers:   

• A website: Give potential customers a clear place to learn about your business, understand what you offer, and take the next step.
• Search: Make it easy for people to find you when they're looking online for the product or service you provide.
• Social media: Choose one or two platforms where your customers spend time instead of trying to be everywhere.
• Email: Build an email list so you can stay connected with people who are interested in what you offer.
• Referrals: Give your customers a great experience and make it easy for them to recommend you to someone else.
• Local marketing: If you serve a specific community, look for opportunities to network, partner with other businesses, or participate in local events.
• Helpful content: Answer your customers' questions and show them how your product or service can make their lives better.

You don't need to do everything at once. Pick the marketing channels that make the most sense for your business and get good at using them consistently. 

How much should you spend on marketing? 

Don't assume you need a huge budget to get started. Begin with what you can afford, and track what's working. Then double down on strategies that actually bring in customers. 

Remember, people tend to do business with companies they know, like and trust. Marketing gives you the opportunity to earn that trust before someone ever becomes a customer.

Starting a business isn’t easy. Neither is keeping one running while also putting out fires and taking care of everybody else's issues. Every owner runs into common small-business challenges along the way. As you build, keep four things in mind:

Focus on your customers. 

Keep listening to the people you're trying to serve. Their questions, feedback and buying habits can help you improve your products and services and create an experience that keeps them coming back.

Watch your numbers.

Don't confuse being busy with making progress. Keep an eye on revenue, expenses, profit and cash flow so you know how the business is actually doing.

Keep learning and adjusting.

Your first plan probably won't be your final plan. Pay attention to what's working, fix what's not, and be willing to make changes as you learn more about your customers and your market.

Don't try to build it alone.

Get help from people who know what you don't, whether that's a tax professional, attorney, experienced business owner or mentor. The right advice can help you avoid expensive mistakes and make better decisions as you grow.

Remember: Building a business is a long game. Stay focused on serving your customers, managing your money well, and getting better as you go.