How to Start a Small Business: A Complete Guide

Learn how to start a small business with this guide’s ideas, advice, and lists of resources.


How to Start a Small Business_ A Complete Guide


You must navigate uncharted waters when you learn how to start a small business. It’s easy to feel intimidated. But remember: Every big business once started small. We’ve compiled some tried-and-true ways to turn your entrepreneurial dream into a profitable, successful business.

Section 1

employees working together

Focus your ideas

First on your “to-do” list is taking a self-inventory of your interests and ideas. What do you love to do? What skills do you have? Your dream may be selling a product or service, but it could also involve starting a nonprofit. It’s all about finding a way to build an organization and career that brings meaning to your life. A wise friend once told me, “If you can’t find your seat at the table, it’s time to start building your own table and invite people who share your vision to sit with you.”

But there’s a crucial question to ask before you grab your hammer, nails, and lumber for your “table”: What kind of gaps exist in the market that your small business could fill? In other words, what problems could be uniquely solved by your company? This is the make-it-or-break-it point for every small business idea because no matter how big you dream, the market has to need you (and your table). You also must be passionate enough to commit most of your time, money, and energy to making it a reality.

Section 2

Conduct market research

If you’re already set on your idea for a small business, it’s time to buckle down and do some market research. This helps you determine whether enough people will benefit from your idea to make it successful. It also helps you evaluate whether the current economic conditions are ripe for a small business like yours. Your best tool will be a search engine. But social media also offers valuable tools like polls to get free feedback from consumers. Keep these questions in mind as you search:

  • How many potential customers need or would be interested in your product or service? Where are these people located, and how would they be able to access your business, products, or services?
  • What are the economic indicators surrounding your business concept? (Sales, salaries, employment rate, anticipated industry growth.) 
  • What are the average price points for your product or service idea? What are the low-cost and high-cost price points? 
  • Do other businesses already offer what you intend to provide?

The next step is to perform a competitive analysis. In other words, you need to know precisely what kind of competition your business will be up against. This will also help determine potential unique selling points that can set your product or service apart. 

You’ll want to get extensive details regarding your competitors’ market share, strengths, weaknesses, and customer base in your research. Look for windows of opportunity or barriers to entry into your preferred market. 

Section 3

Develop a solid business plan

Now that you’ve determined that your business idea is well-worth pursuing, it’s time to build a blueprint

Every business needs a business plan. Business plans can help you determine if your vision is viable or if you need to go back to the drawing board. It also will keep you on track after you start your business. These are some key elements your plan should include:

  • Executive summary. This lays out your business’s mission statement and values statement. Briefly describe your company’s objective and why it’s a successful business idea.
  • Company description. A detailed description of your business model, what problems it solves, and the projected customer base.
  • Market analysis. Describe the industry outlook and your target market — state how your business fills a gap. Don’t forget to include information about your direct competitors.
  • Company organization and management. State your company’s legal structure and list the leadership in your business, even if it’s just you.
  • Services or product line. List the products or services your business will provide.
  • Marketing strategy. Explain how you plan to market your business and your unique selling proposition.
  • Funding request. If you plan to attain funding, explain how much you need for the next 5 years and where that funding will be spent.
  • Financial projections. Explain in detail your financial projections. The goal is to show your investors that your business will succeed.

Appendix. Provide supporting documents and other material, such as credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts.

Section 4

Assess the startup costs 

As you develop your business plan, you will have to develop a list of the startup costs you will face. According to the Minority Business Development Agency (MBDA), the average business will need $30,000 in startup funds. That’s no small number. However, it all depends on the nature of the industry and business. 

The costs to start a business typically fall into 2 categories: ongoing expenses and assets that are one-time purchases. To determine the total financing needed, you must compare the startup costs against your current capital. Most experts recommend having at least 6 months of expenses on hand, plus initial start-up expenses. It’s also important to keep in mind that most businesses aren’t profitable for 4 years. 

Potential expenses may include:

  • Research and development. If your new business idea involves creating a product, you’ll need to develop and refine it.
  • Logistics and distribution. How will you source your materials and deliver your products?
  • Protection. Some businesses must protect their intellectual property with copyrights, patents, and trademarks.

Overhead. A brick-and-mortar business will require renting a space to sell goods or conduct your business and services. The following items apply to almost any business, whether or not it also requires commercial space.

  • Insurance. This protects you against liabilities and hazards associated with your business.
  • Advertising and marketing. How will you get the word out about your business? 
  • Business registration. Federal, state, and local requirements vary and may require registration fees.
  • Equipment. Including manufacturing and office supplies.
  • Payroll. Will you eventually need to hire more employees? An accountant or accounting software will be necessary, too.
  • Website hosting and development. Get your brand online and potentially make digital sales and connections.
  • Growth. Think ahead about what assets you will need as your business scales up.
Section 5

Plan for and secure startup financing

Before you can start your own company, you’ll probably need financing. The reason that many businesses fail in their first few years is that they develop cash flow problems. The good news is that small business have many options, including:

  • Loans. Traditional bank business loans, personal loans, and Small Business Administration loans are all options for a new business. If you need financing, take advantage of state and federal grant programs and loans from the SBA. Find federal grants at Grants don’t need to be paid back, but you must ensure you use the money for the allowed purpose. Check out the SBA for loans that may have better, more affordable terms than traditional bank loans. 
  • Business lines of credit. A startup business line of credit is “revolving” capital that works almost like a credit card, except you get access to cash and, in some cases, lower annual percentage rates (APRs). You borrow up to a specific limit and pay interest on only the portion of the money that you borrow.
  • Business credit cards. These offer unique benefits suited to businesses. Business cards typically come with employee cards, higher credit limits, greater reward potential, and tools to help you manage spending.
  • Small business grants. This is seed money for a business startup or project, usually offered by government agencies, nonprofits, or specific businesses. Grants are typically awarded to businesses that benefit a government or other community initiative.
  • Crowdfunding. The internet has popularized this method of funding, but you don’t have to be an online store to use it. Websites like Kickstarter, Indiegogo, and GoFundMe are among the most popular crowdfunding platforms that allow anyone to become a financial supporter of a business or cause.
According to the Minority Business Development Agency (MBDA), the average business will need $30,000 in startup funds.
Section 6

Develop an exit strategy

All small businesses and their owners should have an exit strategy. While this isn’t necessarily included in your business plan, it’s a good idea to keep it in mind. It will help you make decisions about structure, taxes, estate planning, and other important matters as the business grows. Some questions to ask yourself include: 

  • Are you building a business for your heirs as a family legacy? 
  • Do you have plans to grow this business and sell it to a larger corporation or business? 
  • Do you plan to close your business when you retire and liquidate the assets for your retirement?
Section 7

Name your business 

While this may seem like the “fun” part of starting a business, you shouldn’t take it lightly. The name will represent your small business and your future business growth. You’ll be known for it and have to stand behind it, so choose wisely. 

Name Your Business Checklist

Print This Checklist Print
  1. Hold a brainstorming session. Throw names out there, good or bad, and note the feedback from within the group.
  2. Run your top business name options through a focus group. Once you have some potential business names in mind, create a focus group of individuals representing your target market.
  3. Pick a company name that “sticks.” A good business name will set you apart from other brands and be positively memorable in the minds of your target customers. Ideally, you want to name your business in a way that mentally evokes something great about your brand.
  4. Make sure the name is available. Choose a name that’s legally and practically available across the board from your top name choices. Check with a domain name registrar, relevant government agencies, and social media platforms.
Section 8

small business owner

Choose a business structure

Understanding organizational structure from the beginning sets a startup up for success. If you haven’t determined your official structure yet, here’s what to consider.

There are several choices, and each offers unique benefits. Not all states require filing official business structure documentation. Some documents are recommended for protection, whether required or not. Check your state’s commerce website for more information about registration requirements. Meanwhile, here’s a brief overview of your options:

  • Sole proprietorship. This business structure is automatically assumed when a self-employed business owner is not registered as any other type of business entity. Taxes are filed through the owner’s personal tax returns, so no formal entity or EIN is required. A sole proprietorship is easier to set up than the other business structures and offers more simplified business tax options. But a sole proprietor’s business assets and liabilities are not separate from personal assets and liabilities.  
  • Partnerships. Two or more people starting a business together may choose a partnership structure. According to the SBA, there are 2 types of partnerships: limited partnership and limited liability partnership.
  • Limited liability company (LLC). Regulations that govern LLCs vary by state. Forming an LLC requires filing articles of organization. An LLC operating agreement is also recommended. An LLC structure’s 2 most considerable benefits are limited liability and simplicity. An LLC protects its owner from personal liability for company debts and other liabilities, so they don’t risk personal assets. In addition, it allows company profits to be passed to the owner and taxed as personal income.

Corporation. There’s more than 1 way to structure a corporation, which includes C- and S-corps. They typically have a board of directors, officers, and shareholders. A corporation structure offers advantages to the owner. These include limited liability, flexibility in transferring ownership, and potential tax benefits. The 2 documents required to file as any corporation are the articles of incorporation (required) and the bylaws — or resolutions for nonprofits — (recommended).

Section 9

Registrations, licenses, and permits

The necessary business licenses and permits will allow you to operate at the city, county, state, and federal government levels. But they also add to your credibility and legitimacy as a professional entity performing business activities. Licenses and permits also help protect the company and personal assets. 

The process to get a business license or permit varies by the type and the agency involved. Your city, county, or state website is the best place to start the search for information. You should find the requirements, where to apply, and what information you’ll need to provide. A business attorney can also guide you through the process.

Types of registrations

EIN. The United States government requires anyone opening a U.S. business to acquire an employer identification number (EIN). You can apply for an employer identification number through the official Internal Revenue Service (IRS) website.

Register with state and local agencies. Corporate, LLC, partnership, and nonprofit structures require you to file documents and register your business with your city and state. You can search by state at the Small Business Administration (SBA)’s website for the appropriate state office with which to register. Visit your city or county website for local registration, licensing, and permitting requirements.

Register your business name. Choose a name that is not already in use, and follow the business registration requirements for your city and state. If you plan to conduct business under a name other than the business’s legal name, register your trade name, also called your DBA, with your state.

Types of business licenses

Some states may require a specific license or permit, while others don’t. The type of business license required will depend on the business’s operation and location. Here are some of the most common necessary licenses companies may need.

Types of Business Licenses

Business operating license


Home occupation permit


Health permits and licenses


Planning and zoning permits


Federal licenses


Less common licenses and permits

Section 10

Small business banking needs

First, we would recommend keeping your business and personal finances separate. When you’re ready to file taxes, it can help you maximize your business tax return and avoid costly fees from the IRS. A separate bank account can also help you maintain your company’s cash flow without dipping into your personal assets.

Here are the steps you need to take when establishing separate business finances:

  • Obtain an employer identification number (EIN) to use rather than your Social Security number (SSN).
  • Set up a business bank account that is completely separate from your personal bank account.
  • Get access to a business credit card instead of using your personal bank and credit cards.

Setting up a business account can seem like a whole beast of its own, so we’ll break it down:

First, you’ll have to choose a bank. Establishing a good relationship with a bank could make securing that all-important small business loan easier. And a good bank, with the right services, can be a natural ally to a business owner.

Consider what you need and want in a bank

While you may be focusing on what you want from a basic business checking account, banks offer other products and services you might also need. Here are some business banking products to consider when you’re trying to choose a lender:

  • Free business checking. A business account with no monthly fee, or one that can be waived easily, can cover debit cards, bookkeeping functions, cash deposits, and other services.
  • Business savings account. If you’re planning on tucking some funds away, look for a bank that offers a high-yielding/low-fee savings account.
  • Credit cards. It’s convenient to pay vendors and take care of expenses with a credit card. Keep your banking under one roof. Choose a bank with several business credit card options. Be sure to factor in any fees and APRs that apply.
  • Money market account. Having a place to stash some of your company’s money that offers a higher dividend is a smart money move.
  • Merchant services. Do you want your business to accept credit card payments? Need payroll services? How about debit card transactions?
  • Small Business Administration (SBA) or commercial loans. Sometimes a business owner needs additional funds or alternative loans. Small business loans can help meet payroll during seasonal slumps, stock inventory during seasonal surges, and everything in between.

Other important attributes to look for in a bank may be unique to your business’s needs. These include accessibility, reputation, customer service, and the institution’s ability to scale with you as you grow. Choose a bank that meets your standards and will make managing your business finances a smooth, cost-effective process.

Open your bank account

So, you’ve chosen a bank for your business. Now it is time to gather the documentation you’ll need to open an account. This will depend on the structure of your business. At a minimum, you’ll need: 

  • Your business name filing documents. 
  • Your Social Security number or Employer Identification Number (EIN). 
  • Partnership agreement (if you’ve formed a partnership). 
  • Articles of incorporation (if you’ve formed a corporation). 
  • Articles of organization (if you’ve formed an LLC). 

Once you have opened the account, check to make sure everything is correct. If you’ve opened a checking account for your business, make sure that the name on your checks is the company’s name. You want to avoid having it read as “your name DBA (doing business as) the company name.” Also, verify that deposits and withdrawals are working correctly. You can often check this using your bank’s online banking feature.

Section 11


Business insurance protects businesses by mitigating the risks of adverse events. Small business owners need to invest in insurance coverage to insulate them from the effects of unfortunate situations. Here’s a look at some common types of business insurance.

  • General liability insurance. Mitigates the risk of claims of property damage or bodily injury that happen on your business’s property. Insurance coverages include settlements, legal fees, and court costs. 
  • Professional liability insurance. For businesses providing professional services to protect themselves against negligence claims. People who benefit from this insurance include attorneys, physicians, and accountants.
  • Commercial property insurance. Protects against losses from property damage from natural disasters like floods, fire, high winds, and hail. All business equipment and supplies will be covered.
  • Commercial auto insurance. A commercial auto insurance policy pays for damage and injuries sustained while operating a vehicle for business use. 
  • Business income insurance. Protects you from an inevitable loss of income if your company can’t operate. For example, if the roof collapses, business income insurance would address the losses incurred while repairs are made. This insurance policy is also called business interruption insurance
  • Product liability insurance. Can mitigate risk if a product is defective or unsafe, resulting in injury or property damage. 
  • Errors and omissions (E&O) insurance. Mitigates risk for small businesses that provide specific services to clients or other companies, particularly accountants, lawyers, and technology providers. If you make errors, miscalculations, or leave out data or additional vital information, an E&O policy covers claims that may result.
  • Business owners policy. Business owners wanting to save money can bundle several types of insurance into a single package. It typically includes general liability, business income, and commercial property insurance
  • Unemployment insurance. If an employee loses their job by no fault of their own, state-offered unemployment insurance provides weekly payments, sometimes called benefits, if the person is eligible. 

Workers compensation insurance. Companies pay for this policy to protect themselves when employees file a workers comp claim against them.

Section 12


Marketing has seen incredible growth with the proliferation of the internet. There are seemingly endless opportunities to get your brand and messaging to the eyes, ears, and hands of consumers. But as a small business, you’re likely looking for the most effective marketing strategy at the lowest possible price point. Here are some potential low-cost ideas to keep in mind as you develop a marketing strategy:

  • Strategically use influencer marketing.
  • Attend networking events.
  • Try a refer-a-friend campaign.
  • Partner with other small businesses.
  • Host a giveaway.

Once your business grows, you’ll be able to expand your marketing efforts and potentially even hire 1 or more people to form a marketing team.

Section 13

Build a website

Websites are a great way to brand your business, reach your target audience, and get qualified leads to turn into customers. While it may cost you some extra time and expense, the return on your investment could be well worth it. A good website demonstrates professionalism, credibility, and legitimacy in the digital age. Not only that, it immediately expands your business’s footprint on a national and global level.

Customer testimonials featured on your website can be a great way to involve your best salespeople: satisfied customers. Satisfied customers and their subsequent word-of-mouth advertising can be more effective than many paid marketing options. Let customers engage with your website with reviews, comments, feedback, or an effective “contact us” feature.

While having a website is essential, what’s more important is that your website is well-designed, intuitive to use, and running smoothly. Making a website from companies that provide generic templates may seem convenient. But this can monopolize your time and energy and ultimately prove ineffective if you ever plan on scaling your business.

To create and manage your website, you can outsource website development and management services or hire an employee who wears multiple hats. The right person will consider your unique business needs and be able to build and manage a multi-faceted marketing machine. This would include site-related tools and integrations that help generate traffic and streamline customer relationship management (CRM).

Section 14

Finance through investment

To get enough financial support to start a business, you may need to go beyond your initial investment, bank loans, and small business grants and consider attracting investors. These individuals or groups supply money to small businesses and startups seeking funding:

  • Angel investors. Individuals with high incomes who help support small businesses. 
  • Peer-to-peer lenders. Companies that invest in other businesses. 
  • Personal investors. Friends, family, or people in your community, personal, or professional network. 
  • Venture capitalists. Equity investors that lend money for a stake in the business. 

Investors will want to see your current profits (if you have any), anticipated future revenue and growth strategies, your market report, and your funding request. In other words, you must show that they will receive a return on their investment. Keep them informed and involved in how you’re using their funds wisely; they’ll have higher stakes in seeing you succeed.

Section 15



Choosing the right employees is critical when you’re just starting. These people will not only be the backbone of your company but will also help you forge ahead as you plan to expand. They should share your company’s values and vision and be prepared to wear different hats until the company can grow.

It may be time to hire if you’re turning down work, missing deadlines, tanking customer service, or can’t act on expansion opportunities. But hiring comes with plenty of challenges. You’re competing for talent with larger, more established companies who may be able to offer better employee pay or benefits. In your job postings, highlight the benefits of working with your small business, whether offering employees stronger levels of autonomy, better creative freedom, or a more personable work environment.

Now that you know what you need and can offer an employee, you’re ready to write an excellent job description and post it in the right places. Yes, a listing on your website is a place to start. But using only this tactic will leave you with a minimal pool of applicants.

To combat this challenge, small business owners can look to online recruiting platforms that provide them with an ability to easily manage hiring processes. These include posting job listings, accessing resumes, tracking applications, and scheduling interviews. Some platforms even provide employers with the tools to syndicate their job listings to cast a wider net for finding great candidates.

Section 16

Managing employees

Now that you’ve hired employees, you want to establish a precedent for how they engage with your company. Employee handbooks aren’t legally required, but they help outline your business policies and procedures. For employers, employee handbooks can help you avoid legal trouble by explaining compliance procedures and outlining all policies uniformly for all employees. They can also reduce compliance risk with federal, state, and local employment laws, including wages and the Fair Labor Standards Act (FLSA).

For employees, a handbook can help:

  • Outline onboarding procedures.
  • Explain your values, mission statement, and company culture.
  • Guide professional dress codes and expected behavior.
  • Provide guidance for time-off procedures.
  • Explain employee benefits packages.
  • Help employees understand what constitutes sexual harassment and other illicit workplace behavior.
  • Help employees find who to email, phone, or message for more information on any specific policy.

If you’re a small business owner ready to write a company handbook, you’re in luck. Zenefits’ How to Create an Effective Employee Handbook guides small businesses through the process and includes an employee handbook template.

Once your employee handbook is complete, distribute it to established and new employees. Update it as your company grows and policies change, and notify employees to review the changes. Finally, have your employees sign a page that states they’ve read the employee handbook and understand workplace and HR policies.  

Section 17


A common question for both employers and employees is, “Do small businesses have to provide health insurance?” The short answer to this question is no. Under the Affordable Care Act (ACA), small businesses don’t have to offer group health insurance unless they meet specific criteria — employing 50 or more full-time equivalent employees for 6 months or longer.

That being said, small business owners who are also full-time employers might benefit greatly from offering health insurance benefits. First, it’ll give you a competitive hiring advantage over other small businesses that don’t provide benefits. But more importantly, it may increase employee productivity and retention and create a healthier corporate culture.

Section 18


Establishing a system for payroll is crucial, especially if you plan on expanding your business. As the CEO, you’ll be wearing many other hats. Payroll and finances are areas where you don’t want to make critical errors, as they can land you in hot water with the IRS. It’s a hat you can easily pass on to some other person or program.

Bookkeeping software can save you time, sync all your financial data, and simplify payroll and tax filing. You’ll also reduce the risk of making costly financial mistakes, avoid compliance mistakes, and be able to see the financial metrics of your business with a few simple clicks. Fortunately, Zenefits has payroll outsourcing services that can get all those vital functions done correctly while letting your company focus on people and business, not paperwork.

Section 19

Tools and resources

As a small business, one of your primary concerns is keeping costs low. This is where free resources are going to be your secret weapon. Tools like trade publications, training, apps, and software can provide low-cost or even free ways to establish and manage certain aspects of your small business.

Small business apps

Today’s business apps and software packages can help boost productivity organization-wide. Many include mobile apps for on-the-go access. Those explicitly designed as small business apps often scale with you, leaving room for growth and eliminating wasted time and money. Consider apps for help managing the following:

  • Accounting. QuickBooks, Freshbooks.
  • Inventory management. Delivrd, SOS Inventory.
  • Marketing. Wix, Nimble.
  • Team management. GoTo Meeting, Slack.
  • Full-service payroll. QuickBooks Time, Gusto, Zenefits.
  • Point-of-sale. Square, Zettle by PayPal.

Project management. Google, Trello.

Small business advice

The following resources can be beneficial for getting clear, quality business advice:

  • Receive free advice from retired and active executives and entrepreneurs sponsored by the likes of the Wall Street Journal, Google, the SBA, Microsoft Inc., and other heavy hitters. Small business owners can request a SCORE mentor and receive valuable insights on business management.
  • Your local community college small business center. Most community colleges have free resources funded by local and state governments to help spur local small business growth to revitalize their communities.
  • You can use this virtual advising platform if your small business meets the criteria. It allows business owners to meet online with advisors who can help you boost revenues, growth, and hiring capacity.

Legal advice

Good legal advice, even when it’s costly, can protect you from expensive issues later on. Fortunately, there are affordable places to go for general legal advice and even specific guidance for your own business.

  • The SBA. Head to and look up the district office nearest you. They can point you toward local legal advising and financing programs.
  • The website includes a free resource where you can submit a question about legal documents, taxes, sole proprietorships, and other issues and get an answer within 24 hours.
  • Legal Zoom. You can pay about $24 a month to get all sorts of small business legal advice, have lawyers write or review contracts, and review other legal documents.

Trade- and industry-related advice

Nobody will quite understand your business needs as well as people with experience in your industry. This is why you need to reach out for networking opportunities, online forums, and other resources related to your industry.

  • Probably one of the most robust online forums for small business owners to discover and “meet up” with fellow small business owners in their industry or local area.
  • Small Business Expo. In 16 major cities across the country, small business owners converge yearly for networking opportunities and education about general and specific industry-related small business issues. Registration is free for these annual conferences.
  • Online business forums. Try and Search both to find advice and discussions that might suit your needs.


Marketing is an essential part of growing your small business. Understanding how to manage traditional marketing with social media marketing, content marketing, and other channels takes time. 

Many previously listed organizations and forums (like SCORE and the SBA) will provide advice on all facets of marketing. But YouTube can also be a valuable resource where successful entrepreneurs share valuable insights for free. Here are some channels to check out:

  • Behind the Brand. If you need help building your brand (an essential marketing step), tune in to see interviews from some of the most successful brand builders out there.
  • Social Media Examiner. Social media marketing, podcasts, and blogs (content marketing) are essential tools for building a brand, driving traffic to your website, and snagging sales. This YouTube channel has shown small businesses the ropes for more than a decade.
  • LinkedIn Marketing Success Hub. This is not on YouTube, but instead can be reached through LinkedIn’s website. This is a prime spot to get advice about focusing on your target market and addressing it to build sales.

Human resources

Once you start hiring employees, you’ll have all kinds of documents, legal issues, and payroll issues to address to keep employees happy and engaged and keep you legally compliant. The following forums’ HR-specific advice resources are worth checking out as well:

  • Workest. From HR compliance checklists to crafting an excellent employee handbook, Workest specializes in providing HR advice to small businesses.
  • Your local small business association. Local small business associations, including official small business development centers (SBDCs), have a wealth of resources related to human resources, hiring the right people, and more.
Section 20

How to start a small business: Make your vision a reality

Are you ready to start a small business? With the right mindset, planning, strategy, and follow-through, you have the potential to not only create a small business but also see it succeed beyond your wildest dreams. For more resources and advice, check out the full-length articles at Workest by Zenefits. In these pieces, you’ll find extensive tips, further resources, and highly detailed guides on how to approach all aspects of starting and running a small business. Even better, Workest will be there for the long term with advice and resources as you continue to develop and prosper. Stay the course, stay focused, and use every available resource. You’ve got this!