Entrepreneurship: How to Start and Grow Your Own Business in 2023

If you’ve landed on this page, you’ve probably decided to start a business. First, congrats, and good for you. Not everyone is bold enough to think of starting their own business. While the prospect of starting and growing your own business is exciting; it requires a lot of planning, perseverance, and flexibility. There are a plethora of things to know and do before you officially open your doors. That’s why we’ve put together a comprehensive guide to help you get started. Keep reading to learn how to start and grow your own business in.

Consider Your Idea

Starting a business isn’t easy. 20% of all startups don’t survive their first year of operation, and nearly 50% never make it past their fifth year, according to data from the US Bureau of Labor Statistics. To increase your chances of success, there are a lot of things to consider and one of them is your “why”.

Your “why” will help you clarify whether you are starting a business solely for personal reasons, or if you’ve identified a profitable problem or a gap in the market. Ultimately, answering your “why” should give you a good idea of the main reason you are going into business.

After locking in your “why”, the next step is identifying your target customers and understanding the market. That’s where market research comes in.

Conduct Market Research

41% of new businesses fail due to a lack of product-market fit. In 2022, SkyNova surveyed over 500 business owners, and when asked what they’d do differently, more than 50% wished they’d done better market research. Market research is the process of gathering information about a market to inform decisions about a product, service, or business. Conducting thorough market research will help you:

• Gauge the viability of your business idea.
• Identify opportunities.
• Understand consumer needs and behavior.
• Understand your competition and the general competitive landscape.

There are a variety of methods that can be used for market research. The best method for you will depend on your specific goals and budget. Generally, a combination of primary and secondary research should provide you with actionable insights. Primary research involves interviewing potential customers to gather your own information, while secondary research involves consulting government reports, industry publications, and other credible sources for existing information.

Understand Your Target Market

To establish who your target customers are, you’ll need to describe them in terms of gender, age, occupation, income, lifestyle, and any other relevant characteristics. Once you’ve created a basic profile of your ideal customer, you’ll need to dig deeper to understand their buying habits.

Key questions to ask include:

• Why do they buy?
• What pain points/problems are they trying to address?
• What brands do they support and why?
• What key features and benefits do they look for?
• What are they prepared to pay?
• What will make them buy from you?

Consult the latest industry reports along with target market research tools to glean valuable insights into your target audience.

Study your competitors

Once you understand your target market, turn to your competitors to identify opportunities to differentiate your product or service. Doing so may help you position yourself as a more attractive option for your target market.

• Assess competitor products or services: What are their strengths and weaknesses? How do they compare to your own product or service? Do you have a competitive advantage?
• Analyze their marketing strategies: How are they reaching potential customers?
• Check out competitors’ customer reviews: What do customers like and dislike about their products or services? What can you do better?
• Talk to your target audience: Potential customers can provide you with valuable insights into your competitors and the market. Survey customers to discover their key pain points and how you can address them better than the competition.

Become an Expert at Your Product or Service Offering

Ideally, it’s best if you were once a customer in your desired niche. Having a customer’s perspective ensures you’re aware of the problems in the niche and makes it easier for you to understand your target market’s needs. Still, there’s always more to learn and understand.

• Immerse yourself in your niche, attend industry events, and network. The more you know about your industry, the easier it will be for you to understand your target market’s needs and develop innovative solutions.
• Keep up with the latest trends. Being aware of the latest trends and developments in your industry will help you stay ahead of the curve.
• Get involved in the community. Participate in online forums and discussion groups to gain deeper insight into your target audience.

Conduct a SWOT Analysis

A SWOT analysis is a strategic planning tool used to identify potential strengths, weaknesses, opportunities, and threats. Armed with its insights, you’ll be able to make better decisions about your business and its future.

• Start by analyzing your strengths and weaknesses. What do you excel at? What separates you from the competition? What areas do you need to improve?
• Identify the opportunities and threats in your industry. What trends are affecting your industry?
• Prioritize your findings. Which of your strengths and weaknesses are most important? Which of the opportunities and threats are most significant?
• Develop an action plan. How can you leverage your strengths and opportunities? What can you do to mitigate your weaknesses and threats?

Markets are dynamic, so remember to review your SWOT analysis regularly and make adjustments where necessary.

Write Your Business Plan

Business plans are like a summary of your entire business. You write them for investors, banks, and most times for yourself — they are a great way to gain clarity. According to Harvard Business Review, having a business plan in place increases your chances of success by up to 7%. Given a chance to go back in time, almost 60% of business owners would create a stronger business plan before launching their business.

Elements of a Business Plan

A business plan describes your business, your goals, and how you plan to achieve them. Consider it a roadmap for your business, one that can help you raise capital, attract customers, and make informed decisions.

A business plan typically includes:

• An executive summary: This is a brief introduction of your company, your service or product, the target market, and how you intend to fund the company.
• Your company and business model: This covers what type of company you’ll run — a sole proprietorship, partnership, corporation, or a Limited Liability Company.
• Market research: This is an in-depth analysis of your proposed market outlining target customers and market analysis on competitors.
• Your products and services: An introduction to the product or service you are selling.
• Your operations and management roles: This details the day-to-day operation of your business and the different roles that are available. It will also briefly describe other management staff on the team.
• Your marketing and sales strategy: Your marketing plan and sales strategy are detailed here. How do you want to market your brand? How much do you see yourself spending on marketing activities?
• Your financial plan: This details how you intend to get funded as well as a breakdown of projected revenue and costs.

Set Realistic Goals

A business plan should always start with a clear vision and mission statement. What is your business’s purpose? What do you want to achieve? Once you have a clear understanding of your goals, you can establish milestones to monitor your progress. Remember to be realistic in your planning as unreasonable goals can set you up for failure.

Update Your Business Plan Regularly

As mentioned earlier, the purpose of a business plan is to gain clarity. So keep tweaking it until you feel comfortable with what you’ve written down. Ideally, your business plan should be a dynamic document that you update as your business grows and changes.

Formulate an Exit Plan

Another thing to consider is creating an exit plan. In case the business doesn’t work out, how do you plan to exit the market? An exit strategy outlines your plans for exiting your business, such as selling it, going public, or merging with another company. It takes between three and five years to set a business up for a successful exit. Therefore, the sooner you draft an exit plan, the better.

Look at Your Finances

Now that you have a rough outline of your business, It’s time to look at your finances. According to joint research by SkyNova and CB Insights, 44% of businesses failed due to cash flow problems in 2022. Evidently, having a solid financial plan is a critical success factor for any new business.

Calculate Start-up Costs

In terms of finances, you’ll need to determine your start-up costs. Working out accurate start-up costs is crucial as not doing so will result in running out of capital.

The average investment needed to get a business off the ground is pegged at around $30,000. Though your startup costs vary depending on the nature of your business, typical costs to factor in include:

• Incorporation fees
• Equipment
• Office space/domain or website costs
• Marketing
• Insurance
• Payroll
• Consulting fees

Price Your Products Effectively

Pricing and cost issues are among the top reasons startups fail. It’s crucial to ensure that you generate enough revenue to cover the costs of keeping your business running all while remaining competitive. One way to do this is to price your products effectively. The right pricing strategy should factor in your costs and a suitable profit margin. It is also helpful to conduct market research to understand the common pricing strategies in your industry.

Conduct a Break-even Point Analysis

You should also calculate your break-even point using a break-even analysis. Break-even analysis helps you determine the point at which your company will stop making a loss and start making a profit. Additionally, conducting a break-even analysis:

• Ensures you make better pricing decisions. By understanding your break-even point, you can price your products or services to maximize profits.
• Helps you mitigate risks and plan for challenges. Your break-even point allows you to better understand how changes in costs or sales will affect your profitability.
• Helps you set informed targets for your business. Knowing your break-even point allows you to set realistic sales targets and track your progress.
• Helps you manage expenses. Knowing your break-even point helps you identify areas where you can cut costs without sacrificing profitability.

Secure Funding

Next, consider your funding options. Most new businesses are funded either through internal financing (family, friends, or personal savings) or external financing (grants, bank loans, or investors). Let’s run through the most common funding methods below:

• Business loan: As of 2020, US Census data shows that roughly 68% of small businesses relied on banks for credit. However, most large banks are reluctant to give loans to new small businesses, so consider partnering with smaller banks or applying for government incentive loans.
• Business Grant: Grants are special loans you apply for but don’t pay back. Grants are specific with their conditions, so it’s best to look for a grant that ticks your company’s boxes.
• Investors: Investors are people who put their money into your business. Your job is to convince them that your business is worth investing in. (You are usually looking for an angel investor at this stage).
• Crowdfunding: Crowdfunding has become quite popular in recent years and involves funding your business through many small investors. People buy into your pitch and decide to invest a small amount of money.
• Bootstrapping: Bootstrapping entails starting a business with little or no money and investing the profits back into the business as it grows. Although this method may result in slower growth, it minimizes risk and debt.

Manage Cash Flow and Expenses

As a new business, it is imperative to manage your costs effectively. In other words, you shouldn’t spend money on things that aren’t necessary for your business to run. For example, buying a printer for twenty employees when you currently have three in the office or renting space for fifty when you currently have seven employees don’t make sense.

We’re not against expanding, but don’t plan for future expansion during the start-up stage. Expand when required and not from the onset. Lastly, ensure that you’re keeping up-to-date financial records for planning and tax purposes. Managing and keeping track of your finances doesn’t have to break the bank. Some of the best free accounting software can help you:

• Create custom invoices
• Track income and expenses
• Manage payments
• And more.

Register Your Business

Most people prefer to do this later, but you can save yourself some stress by registering your business early. For most small businesses, registering a business simply involves registering your business name with state and local governments. In certain cases, you don’t need to register at all.

For example, if you conduct business as yourself using your legal name, you don’t need to register. However, keep in mind that if you don’t register your business, you could miss out on personal liability protection, legal benefits, and tax benefits. There’s a lot to consider, but we break it down into steps.

Step 1: Determine Your Business Location

The location of your business can have a significant impact on your legal requirements, tax obligations, and revenue. Where you choose to establish and run your business depends on the nature of your business, but factors such as the costs of doing business, demographics, and competition are key considerations.

The State of Delaware is a leading location for both US and international corporations. Over 1 million business entities have made Delaware their legal home, including 66% of Fortune 500 companies.

One of the primary reasons businesses choose Delaware is because the state provides a complete package of incorporation services. The Delaware General Corporation Law is the most advanced and flexible business formation statute in the US. In addition to the attractive court system, Delaware also provides some tax incentives for businesses.

However, Delaware isn’t your only option. A recent study by WalletHub compared 50 states across 27 key startup success indicators to determine the best ones to launch and grow a business. Here’s what they found:

• Overall, Utah is ranked as the best state to start a business.
• Florida ranks in second place, followed by Texas and Colorado.
• The worst states to start a business are West Virginia, Connecticut, and Alaska.

Step 2: Determine Your Business Name

The next thing to determine is your business name. While this may seem pretty straightforward there are lots of things to consider. With over 30 million small businesses in the US, the right name can help you stand out. Your business name should strike a balance between being strategic, creative, and technical.

Brainstorm Names

Start with an informal brief outlining what you want in a business name. You can scribble down some names on your own or make use of sites that help you auto-generate company names. Your business name should be descriptive, unique, and not too restrictive. Don’t be afraid to get creative — 72% of the world’s best brand names are made-up words or acronyms.

From a legal perspective, your name should be original and not registered to anyone else. Be sure to check copyright records and trademark records online to help you avoid legal issues. Other key factors to consider in a name include:

• Does it convey the right message?
• Can it accommodate changes in your business or brand?
• Is it easy to spell and pronounce?
• Is it catchy or creative?

State naming laws vary, but some require that a name reflect the type of business being registered. However, you can register your business under one official name and operate under another, known as a Doing Business As (DBA) name. DBA names are subject to federal trademark laws, but there is no requirement for them to be unique at the state level.

Ensure a Matching Domain Name is Available

Coming up with the perfect business name is only the first step. Before you can fully commit to it, make sure a matching domain name is available. If it is, buy it immediately — a domain name that matches your brand can be a real asset, especially when it comes to search engine optimization (SEO).

Step 3: Determine Your Business Structure

Your business structure is determined by what kind of business you want to start and your plans for expansion. Here’s a snapshot of the most common business structures in the US:

• 86.5% of nonemployer businesses are sole proprietorships.
• More than 50% of small employer businesses are S-corporations.

Let’s explore these business types in detail below:

Sole Proprietorship

Sole proprietorships are the most common type of business structure for small businesses. This is because they are the easiest to form and have the least amount of regulation. With a sole proprietorship, there is no separation between you and your business. You’ll need to pay income tax on all profits generated. Plus, your personal assets can be used to cover business debts and any other business costs that arise.

General Partnership

A general partnership refers to a business that’s owned and operated by two or more people. Like a sole proprietorship, you and your partners would be liable for the business’s debts, taxes, and obligations arising from legal rulings.

Limited Partnership

Limited partnerships have at least one general partner who runs the business and is fully liable for debts and losses. In other words, you would have other partners known as limited partners and their role would simply be to provide funding. They wouldn’t be involved in the day-to-day running of the business and their liability would be limited to how much they’ve invested.

Limited Liability Partnership (LLP)

In an LLP, all partners are joint owners of the company. However, their liability is proportional and limited to their initial investment. In other words, they can only lose as much as they’ve invested.

Limited Liability Company (LLC)

With an LLC, a business exists as a legal entity in its own right. This, together with the tax benefits it provides makes it a great option for small business owners. As business affairs are legally separate, owners’ personal assets can’t be used to cover liabilities, debts, and taxes. It is also much simpler to register than a corporation.

Corporations

Most experts advise that it’s better to register as a corporation. Corporations can be separated into various types (S, C, B, Non-profit) but their main advantage is that they operate as separate legal entities. As discussed in the previous section, if you’re sued as a partnership or a sole proprietorship, then your personal assets are at risk. But if you’re sued as a corporation, it’s the company’s assets, and not your own, that are on the line.

S corporations are taxed like partnerships or sole proprietorships, meaning that the business’s profits and losses are passed through to the owners for reporting on their personal income tax returns. However, S corporations are not subject to the double taxation that C corporations are.

C corporations are large entities with multiple investors and shareholders. C corporations are taxed separately from their owners, meaning that the business pays taxes on its profits, and owners pay taxes on their dividends.

Step 4: Apply for a Federal Employer Identification Number (EIN)

A federal employer identification number, or EIN, is how the government identifies your business and ensures your business is registered to pay taxes, benefit from any deductibles, hire employees, and more. You’ll also need it to incorporate your business. To get an EIN, visit the IRS website.

Step 5: File to Register or Incorporate your Business

If your business is a limited liability company (LLC), corporation, partnership, or nonprofit corporation, you’ll need to register with the Secretary of State’s office, a Business Bureau, or a Business Agency in the state where you conduct business activities. Business registration procedures vary from state to state, and your business must meet the requirements in each state you plan to operate in.

Universal filing requirements include:

• Your EIN.
• An official business name.
• An official business address.
• Ownership, management structure, or directors.
• A filing fee (less than $300, but fees vary depending on your state and business structure).
• Registered agent information (to receive official papers and legal documents on behalf of your company).
• Number and value of shares (if you’re a corporation).

As shown in the table below, the additional documents required will vary based on your state and business structure.

If your LLC, corporation, partnership, or nonprofit corporation conducts business activities in more than one state, you’ll need to file for a foreign qualification in those states as well. However, you’ll only do this after you’ve registered or incorporated your business in your domestic state. Note that each state has its own requirements and filing fees which tend to vary according to business structure.

Step 6: Apply for Any Special Permits and Licenses

The licenses and permits you’ll need generally depend on:

• The nature of your business.
• The industry your business operates in.
• State and local laws.

It’s important to understand the laws and regulations that govern your business and industry. If you don’t obtain the right permits and licenses, it could stall your operations, lead to financial losses, and even result in criminal charges in the worst case. When in doubt, consult with a business or corporate lawyer to ensure all your bases are covered.

Step 7: Open a Business Bank Account

Once you have an EIN, you can open a business bank account. Choosing a bank that understands your unique needs as a small business is crucial.

LLPs, LLCs, and corporations are legally required to open a business bank account while unincorporated partnerships and sole proprietorships are not. However, it’s still advisable to have a separate bank account for your business. This helps keep your business finances separate from your personal finances. Plus, if you ever decide to incorporate your business, having a separate bank account makes things easier.

After you’ve set up your bank account, you’ll need to set up a seamless, reliable payment system. Some of the most common payment systems for businesses in the US include PayPal, Square, and QuickBooks Payment Online.

Here’s what to look for in a payment system:

• Reliability
• Dedicated customer support
• Transparent fees
• Ease of use
• Payment types supported
• Integration options
• Security
• Scalability
• Positive user reviews

Step 8: Protect Your Intellectual Property

If you have valuable intellectual property (IP) that you’d like to protect, it’s important to start the process early. To trademark your business, brand, or product name, file with the US Patent and Trademark Office. A trademark is a special name, phrase, symbol, or sign that sets your product or service apart from others like it. Registration usually takes between four to six months.

Once your trademark is registered, it’s protected throughout the US, and you can take legal action against anyone who uses it without your permission.

If you’ve invented a new product, patent it. A patent prevents anyone else from making, selling, or importing your product for a specified period of time. The process can take up to five years, so it’s best to put in an application as soon as possible.

Choose Your Team

To build a profitable and resilient business, you’ll need to surround yourself with a team of talented and dedicated individuals who share your vision. Unfortunately, finding the right people to work with isn’t a simple task. In 2022, over 40% of small businesses reported significant challenges in hiring employees.

Understand Your Key Requirements

First, you’ll need to be specific about your requirements. What roles are you looking to fill? What traits are you looking for? Do you need full-time, part-time, or contract staff? Understanding your key requirements will help you hire the right people.

Conduct Research

Conduct research on who is hiring in your industry and what the economic landscape looks like. Reviewing other job postings will give you an idea of things like salary before drafting your own posts.

Compile the Necessary Paperwork

For a hassle-free recruitment process, gather all the necessary paperwork before you start hiring. Typical forms and documentation to prepare for each new hire include:

• W-4: Helps you calculate the taxes to withhold from each paycheck.
• I-9: Verifies the employment eligibility of the new hire.
• Direct deposit form: Provides an employee’s banking information for seamless payment.
• Non-compete agreement: Specifies the amount of time that the employee is restricted from working or consulting for competitors.
• Employee handbook: Outlines the company’s mission, vision, policies, dress code, code of conduct, and so on.
• Acknowledgment form: Allows an employee to confirm that they have read and understood all terms, documents, etc.

Create Detailed Job Descriptions

Job descriptions describe the duties, responsibilities, and qualifications needed for the positions you want to fill. Therefore, it’s important that they’re as detailed as possible to attract the right candidates.

Broaden Your Search

To find quality candidates, post job openings on reputable career websites such as ZipRecruiter and LinkedIn. Consider leveraging your professional and personal network to find like-minded candidates. If you have the resources, consider outsourcing hiring to experienced recruiters.

Invest in Your Employees

A great way to ramp up your team’s performance is through project management software. The right system will help you stay organized, track progress, and communicate effectively. Ultimately, this can lead to increased productivity, better decision-making, and lower stress levels for all team members.

Set up an Employee Management System

Your team is your greatest asset. As such, ensure that you are providing them with the right conditions and resources to drive your business forward. One way to do this is to make use of the best HR and payroll software to help manage your employees.

The right HR and payroll software can help you:

• Automate time-consuming tasks like payroll processing and benefits administration.
• Track employee performance and attendance.
• Comply with employment laws.
• Make better decisions about hiring, compensation, and training.

Get Insurance

Getting insurance may seem like a waste of money, but it’s a smart move for any budding business. Your insurance needs will vary depending on the industry you belong to and the type of business you operate. General liability insurance, however, covers the basics of any business, including damage to property and employee or third-party injuries.

Here are key things to consider when choosing the right insurance:

• Determine what types of insurance are legally required for your business.
• Prioritize business-specific risks but plan for natural disasters, accidents, or lawsuits as well.
• Consider working with a licensed agent that understands the ins and outs of your industry.
• Compare quotes from several different insurance companies to find the best coverage for your budget.
• Read the fine print to understand what’s covered by each policy.
• As your business grows, be prepared to update your insurance.
• Ask questions and seek clarity on any sections of your insurance policy that you don’t understand.

Market Your Business

While the best marketing strategy will vary depending on your specific business and target market, there are key actions you can take to give your business the promotional boost it needs to grow. Let’s explore these in greater detail:

Invest in Branding

According to Statista, strong branding enhances business performance primarily through its influence on customers, employees, and investors. In fact, according to a 2022 global survey, 50% of consumers are willing to spend more on a brand that appeals to them.

To stand out from the competition, invest in your branding or the colors, symbols, logos, and slogans that your target audience will associate with your business. Then, ensure that your brand values, image, and messaging are consistent across all your customer touchpoints. To take your brand and business to the next level, consider enlisting the help of some of the best branding agencies.

Establish a Strong Online and Social Presence

Once you have a killer brand, you’ll need to take your reputation online through a company website and a social media presence. A website is a great way to promote your business, sell your products and interact with customers. Plus, social media is now the fourth largest source of brand discovery, accounting for 26.8% of leads in 2023.

Keep in mind that the best social media platforms for your business will depend on your target audience. If you need help with social media marketing, consider working with top social media marketing agencies.

Leverage Email Marketing

A well-crafted email marketing campaign can do wonders for generating leads and communicating with existing customers. To grow your business, strategically build your email list. Next, offer value. To keep customers subscribed to your email list, you’ll need to send them interesting and informative emails. You can also offer discounts, coupons, or other exclusive offers to boost your sales. Overall, it’s worth investing in the right email marketing software to track and manage your email campaigns.

Take a Customer-centric Approach

It’s not enough to simply attract new customers, to ensure your business’s long-term survival, you need to build a loyal customer base. Satisfied customers are more likely to make repeat purchases and refer their friends and family. Not to mention that focusing on customer retention is more cost-effective than constantly acquiring new customers.

So, if you haven’t already, take a customer-centric approach. This means consistently delivering great customer service and making your customers feel valued. But don’t stop there; you’ll need the right CRM software to build and manage lasting relationships with your customers.

Stay Agile

To wrap up: Stay updated on the latest industry trends and adapt your goals and processes accordingly. Learn how to analyze market changes and be flexible enough to capitalize on opportunities. Remember, growth comes naturally when the fundamentals are applied and repeated.

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