So you want to become an entrepreneur? That’s great! Starting a new business from scratch is an exciting and challenging experience. If your business succeeds, it can also be very rewarding.
But succeeding is the hard part! One out of five new businesses fail in the first two years, and just under half make it past the five-year mark, according to the Bureau of Labor Statistics.
But don’t let the stats fool you. There is a wide variety of reasons why new businesses thrive or fail, including location, type of business, and starting capital.
What’s more, some of these statistics don’t consider why a business might close, such as the owner retiring or the business being sold. With the right information, a solid business plan and a can-do attitude can help even novices achieve their entrepreneurial dreams.
And it’s not only about becoming rich. Many entrepreneurs start their own business because they are highly skilled in their area of expertise and they love what they do. Whether for the satisfaction of building something or to contribute to a community, entrepreneurs may be motivated by any number of incentives.
Here at Homebase, we’re all about helping new entrepreneurs succeed! That’s why we’ve put together this brief guide on how to be an entrepreneur, including six steps to take you from zero to revenue. Let’s roll up our sleeves and dive in!
Become an entrepreneur—successfully.
No one is born an entrepreneur. With the right mindset, you can set yourself up for entrepreneurial success.
Successful entrepreneurs develop a few core characteristics, including:
Adaptability: The ability to adjust to changing circumstances. In today’s fast-paced business world, market conditions can shift rapidly. Sticks in the mud get buried!
Resilience: Running a small business means facing setbacks—and rising to the challenge. Your success may be determined by your ability to bounce back.
Creative problem solving: Successful entrepreneurs need novel ideas to solve problems.
Having a learning mindset: A wise entrepreneur looks at obstacles and mistakes as learning opportunities that can propel them forward. With a learning mindset,, “failure” is just another word for “lesson.”
Knowing when to ask for help: While we tend to idealize rugged individuals, the truth is that no entrepreneur can succeed purely on their own. Knowing what you’re good at and what you’re not—and asking for help when you need it—are hallmarks of savvy entrepreneurs.
While these aren’t the only characteristics that can make an entrepreneur successful, cultivating these skills over time will serve you as you grow your business.
Start a small business in 6 steps—with no money.
Each business is unique. This said,every business should take certain steps to get off the ground. And while starting a business with little to no money is difficult, it is possible. After all, not everyone has a wealthy parent to provide seed funding. Here are six practical steps to guide you as you launch your entrepreneurial endeavors.
Step 1: Crystalize your idea.
If you’ve decided to start a new business venture but need to hammer out the details of your business plan, the first step is to brainstorm!
Start by thinking about your passion, then turn your eye toward market need. For example, maybe you love dogs and there aren’t any good dog walkers in your area. Even if there are other dog walkers in your town, maybe you can offer an additional service to add value, such as dog feeding or grooming.
No matter your business idea, ask yourself:
- Does it meet a need?
- Am I the right person to meet that need?
Step 2: Conduct market research.
No business operates in a vacuum. To be successful, you need to have an idea of who your business will serve, what problems your business will solve for them, and how you’ll do it better than anyone else.
In other words: do market research.
There are multiple ways to do market research—it’s easy to get lost down a real rabbit hole. Focus your research on:
- Who are your customers? Develop a profile of your ideal customers that include things like demographics, lifestyle preferences, job title, and most importantly their pain points related to your business.
- Who are your competitors? What do they offer? How much do they cost? What is their value proposition?
- What trends might impact your business? Social and technology trends can have a huge impact on the success of a business. For example, when the pandemic hit, people suddenly had to work from home. This made video conferencing services suddenly far more useful and popular than they were before.
Just remember: The point of conducting market research is to validate your idea so you don’t spend a lot of time (and sometimes money) on a business that customers don’t need.
Step 3: Create a business plan.
A business plan outlines your strategy, goals, and the steps needed to achieve those goals. It will guide you from the inception of your business through its growth and expansion. Every business, regardless of what stage it’s in or its funding status, can benefit from a business plan.
Business plans vary. A comprehensive business plan will include certain key sections, including:
- An executive summary with a condensed overview of your business plan.
- Your business mission, values, and goals.
- A company description that answers critical questions about your business and the problem it solves.
- A market analysis that positions your business against competitors and includes details about your target market, market size, growth rate, and market trends.
- A products or services section that details your business operations, including what you offer, its cost, who creates the product or provides the service, and your overhead expenses.
- A customer section that summarizes your ideal customer using the research you’ve conducted.
- A marketing plan that outlines your unique value proposition and how you intend to reach your customers.
- A financial plan that includes a proposed budget and projected financial statements. This section can also include any funding you’re seeking.
Step 4: Decide on a business structure.
The structure of your business can impact various important aspects of running a business, such as tax obligations, daily operations, and personal risk.
Some different business structures include:
- Sole Proprietorship: Common for solo entrepreneurs, where the business and its owner are considered the same entity. The owner is personally liable for all business debts.
- Partnerships: Suitable for businesses with multiple owners. A partnership agreement is necessary, and partners have limited liability for the debts of the partnership.
- Limited Liability Companies (LLCs): Can be owned by one or more entities. LLCs limit personal liability for business debts and are relatively easy to establish.
- Cooperatives: These businesses operate to the benefit of their users and span various industries, including healthcare, retail, restaurants, and agriculture.
- Corporations: More complex from a legal and tax perspective, corporations are usually larger companies. They can sometimes be found in small businesses.
Consulting with a lawyer or accountant before deciding on a business structure can help you choose the right structure for your business.
Step 5: Get the legal stuff out of the way.
There are a handful of things you must do in order to officially become a business. These include:
- Get a federal tax ID: You must obtain an Employer ID Number (EIN) from the IRS in order to do business. You can do that on the IRS website.
- Register your business: You may also need to register your business with your state or local government.
- Get a business bank account: It’s best to keep your business finances separate from your personal finances. Look into opening an account for your business.
- Get insurance: Every business needs some sort of insurance, even if it’s basic liability. Talk to an insurance professional for guidance.
Step 6: Figure out your finances.
Although it’s possible to start a business with essentially no money, you will have some initial expenses when you start, especially if your business requires a license. You’ll also likely need to hire specialists to help you with developing branding and building a website. You may even need to purchase some specialized equipment.
Your business plan should address your finances: what your startup costs are and how you intend to finance the launch. Check out our blog post on first-year finances for new business owners for tips and tricks to make your funding stretch further.
Set yourself up for entrepreneurial success.
Once you’ve gotten these basics down, you can start developing and launching your business! But business development requires its own set of tools!
Help yourself down the road to success by putting the right tools in place from the beginning.
Be the boss of your business. Homebase offers a number of automations that will cut down on repetitive tasks and free you up to focus on more pressing challenges.
Looking to hire already? Homebase can help you sort out your team’s schedule, keep tabs on their hours, and handle payroll without a hitch. Plus, you get a team chat app that keeps everyone in the scheduling loop. Homebase even offers professional HR advice to help you stay compliant with laws and regulations, so you can skip the—HR department.
Homebase is your one-stop business management app that makes being a new entrepreneur a breeze. Give it a try for free.
