When it comes to starting your own business, it can be hard to know where to start. After all, there are so many things to do. From coming up with the idea for the business itself, to creating a plan, to actually launching and getting things off the ground, the to-do list can seem daunting and never ending.
According to Google’s Year in Search 2021, last year, more people searched for “how to start a business” than “how to find a job.” And recent U.S. Census data found that in 2020, business formations rose by nearly 42%. So if you’re considering starting a side hustle, you’re in good company.
With the seemingly shaky economic situation these days, it’s probably a smart move to diversify your income sources, and starting a business is one way to do that. If you’re thinking about starting a business, here are five things you should do first.
1. Have an idea
The first step in starting a business is to have an idea. You don’t have to reinvent the wheel here, but it’s important to consider how you’ll put your own stamp on it.
“It’s important to ask yourself, why would people come and buy your product or service from you? What do you stand for?” says Tim Simons, Owner, Founder, and CEO of New York-based Build Coaching, who works with Fortune 500 clients including Spotify, Facebook, and Estée Lauder. “Once you know this, apply it to everything you do – websites, packaging, language, customer service, invoicing, et cetera.”
Simons, who works with businesses and individuals to plan, develop, and grow toward a foundation of success, says wannabe entrepreneurs should have a clear understanding of their offering, and how it fits within their niche.
“It is super helpful to keep you in that lane and focussed on making that as good as it can be,” he says. “Sometimes too many ideas or opportunities can be a disadvantage, as you go an inch deep and a mile wide, instead of the other way around.”
2. Write out a plan and timeline
The next step in getting your business up and running is to write out a business plan and a timeline. If you need to secure funding to get your idea launched, you’ll need to have a solid business plan to show a lender as to how you intend to become profitable. Giving yourself a timeline helps hold you accountable and gives you goals to work towards.
A good business plan should include:
Company name and description
Management and organization
Products and services
Logistics and operations plan
You might find, like Simons, that what you planned on isn’t the right path, once you start heading down it – and that’s OK! Be open to pivoting, trying new things, and seeing where the journey takes you. Plans shouldn’t be set in stone. Part of being successful in business is to stay adaptable.
“When I left the corporate world after 15 years, I launched a business that was half leadership coaching and half marketing consulting. It wasn’t until about 10 months into the journey that it was clear the coaching path was the way to go,” says Simons. “Not just because there was more demand and money coming my way for my coaching services, but because it lit me up and thrilled me. That annoying saying of “if you love what you, it doesn’t feel like work” kicked in and from there I narrowed everything down to a coaching business and really I took off from that point. Ten years later it’s still one of the best decisions I’ve ever made.”
3. Have your business admin done and ready
Simons says the next thing people should tackle when starting a business is to make sure the admin side of things is taken care of. Some things that should be on your to-do list include:
Apply for federal/state tax ID numbers
Open a business bank account, credit card, and line of credit
Obtain a business license and/or permits
Apply for business insurance
Consider what tools and software you’ll use
After these things are in place you can get to work hiring your team (if you’re not taking the solopreneur route) and marketing your business.
4. Know your why
It can be easy to fall into the trap of starting a business solely in the hopes of it becoming a golden goose. And while there’s nothing wrong with wanting your business to make a little (or a lot of) money, those that are often most successful are founded by people who know why they want to start a business.
“Make sure you know why you want to go on this path,” says Simons. “It better not be to prove other people wrong, or because you think it’s all working by the beach.”
Whether you want to solve a problem, have more flexibility in your schedule, or yes – make more money – getting clear on your why can help you stay focused, especially when the going gets tough (and it probably will at some point).
5. Have a vision
Simons says the final step in starting a business is to define what success looks like. This could be financial targets, customer acquisition goals, or only working a specific number of hours each week.
“Your plan should include all the steps and milestones along the path to get there,” he says.
Defining what success looks like is crucial, as research shows that businesses with a formal plan have a 30% chance of growth in sales and the potential to double their business.
“People should keep in mind that success is not a straight line, and this will feel like being on a roller coaster sometimes.,” says Simons. “You might go backwards to go forwards. What you thought might take a month, takes you 6 months, and so on. You have to be agile, flexible and willing to adjust your course when the winds change.”
Other things to watch out for when starting a business, according to Simons:
If you’re working with a partner(s) be very clear on what you all want out of this. Be aligned on how long you want to give this before you decide it’s not working (if that happens, which it sadly does to most start-ups).
Get support (not your family and friends, but a coach, a mentor, an accountant, or whoever, but someone to hold you accountable and cut through the often rose-colored glasses of you being the next Uber).
What’s your plan for pressure? By starting your own business, you have just invited pressure into your life. It will be walking beside you each day on this journey, so do you know how to identify it and how to embrace it and turn it into high performance?
Can you be a leader of yourself? Can you create a culture and a vision to work under, and then be the employee that leader needs? You are in both shoes when you start running your own world.
How will you manage fatigue? This is a marathon, not a sprint. And if you don’t rest and recover along the way, you won’t make it.