how to start a small business article

Starting a Business | How To

How to Start a Small Business: An Ultimate Guide

Published October 9, 2023

Published Oct 9, 2023

WRITTEN BY: Agatha Aviso

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This article is part of a larger series on Starting a Business .

Starting A Business?

• 1. Come Up With a Business Idea
• 2. Test Your Business Idea
• 3. Write a Business Plan
• 4. Acquire Funding
• 5. Choose Structure & Register
• 6. Get Business Insured
• 7. Build Team
• 8. Set Up Systems & Software

Bottom Line

Whether you’re starting a part-time business or quitting your corporate job to create your dream biz, you’ll find information in this guide to help you succeed. Throughout this article, you’ll learn how to start a small business from experts in finance, legal, marketing, human resources, software, insurance, as well as expert advice from former small business consultants.

Starting a small business involves coming up with a business idea, testing the idea, writing a business plan, acquiring funding, choosing a business structure, registering the business, getting it insured, making key hires, setting up systems, and finally, marketing and promoting it.

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As you’re starting your business, it’s wise to register it as a legal entity, like an LLC. Doing this will protect your personal assets if a lawsuit were to occur against the business. You can register your business as an LLC through an online legal service.

IncFile is an online service that handles and files the paperwork so your business can become an LLC quickly.

Start your business today with IncFile for as little as $0 plus state fees with no contracts and no hidden fees.

Should you start a business? Before coming up with a business, it’s crucial to determine if you’re ready to become a business owner and there are many things to consider. Examine the main points to consider by reading our guide on determining if you should start a business .

“Starting a business is not for everyone. Generally, starting a business, I’d say, No. 1 is to have a high pain threshold. When you first start a company, there’s lots of optimism and things are great. Happiness at first is high, then you encounter all sorts of issues and happiness will steadily decline, and then you will go through a whole world of hurt, and then eventually, if you succeed—and in most cases, you will not succeed—if you succeed then, after a long time, you will finally get back to happiness.” – Elon Musk

Step 1: Come Up With a Business Idea

All businesses start with the same first step— coming up with a business idea . When coming up with an idea for your business, consider your own skills and experiences, as well as business trends and problems or pain points your business could help address.

As you go through your day, you should write down any ideas you have. Look for problems you’re having in your own life. Can you solve that problem yourself and turn the solution into a business?

It’s also important to consider your personality when choosing a business idea:

• Would you like to work at home in silence or talk with customers in a store?
• Would you like to have a lifestyle business, which caps your income, or an eight-figure business with employees?
• Would you like to start from scratch or purchase an existing businesslike a franchise?
• Would you like to work 80-hour weeks and grow a business fast or keep a more balanced life and grow the business slowly?
• Would you like to create products and have other people sell them or sell products that other people have created?

Think about these questions to help you begin with the end in mind. Another personality-based test is to notice your energy levels when doing tasks at work and home. What tasks give you energy, and what depletes your energy? Running a business that gives you energy will be much more likely to succeed.

Business Idea Examples

Browse our list of business ideas for inspiration:

• Best Business Ideas to Make Money
• Best Business to Start
• Best Businesses to Start With Less Than $500
• Mompreneur Business Ideas
• Home-based Business Ideas
• Small Farm Business Ideas
• Low-cost Franchises
• Creative Business Ideas Started During the Pandemic

Additionally, you may want to browse “how to start a business” guides to learn more about a specific business idea:

• Restaurant or catering business
• Cleaning business
• Clothing boutique or a consignment store
• Coffee shop
• Dropshipping business
• FedEx routes
• Ghost kitchen
• Lifestyle blog
• Online store
• Online T-shirt business
• Personal training
• Retail store

Starting From Scratch vs Buying Existing vs a Franchise

One question you may have is if you should start your small business from scratch, buy an existing business, or purchase a franchise? Two things to consider are your business experience and available funds.

If you have no experience running a business or in a particular industry, buying into a franchise can increase your odds of success. When you buy into a franchise , you’re mostly learning how to run the business. If you follow the franchise formula in a well-populated area, you’re likely to succeed.

The same line of thinking applies to an existing business. Purchase an existing business, and you’ll learn how to run the business—plus receive previous customers. This combination makes the likelihood of success higher than you’d have for a brand-new franchise.

The challenge with buying a franchise or an existing business is cost. The high cost is one of the main reasons most new entrepreneurs start their business from scratch. However, keep in mind that there are dozens of franchises that cost under $25,000 .

• Buying a Franchise: How to Buy a Franchise in 8 Steps
• Financing a Franchise: 7 Best Loan Options
• 11 Franchise Marketing Tips to Grow Your Business
• 19 Best Franchises Under 10K

How Much Money Do You Need to Start?

It’s essential to know the answer to this question before starting your business. I’ve met with several people who never got their business off the ground because it required too much money. Remember, if you don’t have the capital available: Dream big, but start small.

To start some businesses, such as residential cleaning or power washing, you may only need $1,000. Use these funds to register the business, purchase supplies, get your first customers, and then, you’ll be in business.

Opening a store with a location is more costly. You’ll need at least $50,000 in funding—possibly several hundred thousand dollars. For a very small retail store, you should plan on earning at least $100,000 a year to cover overhead costs and make a nice profit.

If you need substantial debt to open your first business—over $20,000—you should seriously think about that decision. What’s the worst-case scenario? And how long will it take you to get out of debt? If possible, start part time with the business and acquire the necessary entrepreneurship skills. Or consider waiting. Save up cash, and take on as little debt as possible.

Learn More: How to Choose a Business to Start

Now that you’ve settled on an idea, it is time to really dive into the market.

Step 2: Research Your Market and Competitors

Once you have chosen your business idea, you need to test the idea to determine the likelihood that it will work. The majority of new business owners skip this step—that’s why 20–22% of small businesses fail within the first year according to the Bureau of Labor Statistics .

Don’t skip this step! You may learn valuable information that alters the type of business you start or how you implement it. All the information you collect will go into your business plan (step No. 3).

Validate Your Business Idea

Validating your business idea involves making efforts to ensure the solution you want to sell is something customers will pay for. True validation comes when someone spends their money on your product or service. However, you may not be able to figure out with certainty how well your product will do in the market until it’s created, or your business is open.

This is where research becomes crucial. Consider creating a few focus groups and surveys to gather feedback. Building an audience online is a great way to elicit feedback for your idea. Additionally, starting a crowdfunding campaign is one of the best ways to ensure your business idea is a good one.

• Evaluate your competitors. Consider your top five potential competitors and list their strengths and weaknesses. What strengths do your competitors have that you cannot beat? What weaknesses do they have that you can improve upon? If you have no competitors, that is not always a good sign. Ask yourself why there are no competitors in your area. There may be a reason. For example, the market may be too small to support your idea or people are not willing to pay for your product or service.
• Identify your target demographic. Customer research is key in deciding whether or not the business will work. There must be people willing to pay for your product or service in your area. To narrow down your customers, consider creating customer profiles for each type of customer you will have. Once you are clear on your customers, you want to determine how many of them are in your area. ReferenceUSA is a database you can use to do this research. ReferenceUSA is a powerful tool that allows you to research customers based on demographics. Tens of thousands of local libraries provide free access to ReferenceUSA.

Perform a SWOT Analysis

A SWOT (strengths, weaknesses, opportunities, threats) analysis is an exercise that helps you think critically about your business idea. SWOT analysis may reveal certain aspects of your business you have not considered—both positive and negative.

Go through each section below and list your ideas:

• Strengths: What will the business do well?
• Weaknesses: What may the business not do well?
• Opportunities: What external market opportunities are there—such as less competition and underserved segments?
• Threats: What external factors may make success difficult—such as regulations?

• Identify your competitive advantages. A SWOT analysis helps you identify your own competitive advantages. A question to ask yourself is: “What is my advantage that the competition will struggle to match? ” Is it your quality of product or service, customer service, or knowledge? This question will help you determine if you can be the best at something. Being the best in a certain area of a business makes it more likely that the business will succeed.

Research a Location

If you’re considering an office or storefront, start your research into the location now. You want to start early to make sure you can afford it. Look into potential locations to develop a rough estimate of the build-out cost (renovations) and monthly rent. The information you collect will go into your business plan and financial projections.

Once you have validated your idea, performed in-depth research, identified target demographics and possible locations, and performed competitive analysis, you are ready for the next step. So far, you have put together informal pieces of a business plan. Now, it’s time to write down information in a document as part of a formal business plan.

Step 3: Write a Business Plan

When you’re just starting your business, a business plan, along with a solid business philosophy , can help you plot your future. Additionally, a business plan is an opportunity to show why and how your business will become a success. All businesses need to create a business plan or a strategic roadmap to guide their business decisions.

The business plan contains several elements, including market analysis, competitor analysis, and financial projections. If you’re seeking funding from a bank or investor, you will need a business plan. The plan shows on paper how you will start your own business. After you open, the document keeps you focused and on track with your goals.

A typical business plan may contain over 40 pages of info about your business. You should plan on spending at least 30 hours creating a well-researched business plan. In addition to writing the plan, you will also spend time doing market research and creating financial projections.

Planning to launch a very small business such as a side business? Creating a one-page business plan might be better. With this plan, you’ll write a couple of sentences for important business concepts. It should include items such as the business model (how will it make money?) and competitive advantage (what will it do better than competitors?).

You should plan on spending around an hour to write out a one-page business plan. The simplified financial projections will be the most challenging and time-consuming. You most likely will need to do research online to get accurate income and expense estimates.

Download our one-page business plan template to start your business planning today.

Most business owners can easily do the research and write the plan. Where most have difficulty are the financial projections, which require creating several financial documents. If you don’t have a financial analysis background or interest, it’s a wise strategy to purchase business plan software that walks you through the financial projection process.

Related: 4 Types Of Business Plans (Plus Software & Writing Services)

Here are nine sections to include in your traditional business plan:

• Opening Organizational and Legal Pages: Cover page, nondisclosure agreement, and a table of contents
• Executive Summary: A summary of the entire business plan in fewer than two pages; Complete this section last
• Company Summary: Basics of the company, such as its history, location, facilities, company ownership, and competitive advantage
• Products and Services: How your business makes money (business model), the products or services it provides, and future products or services
• Market and Industry Analysis: Analysis of potential customers and industry. Include any data here about your current (or ideal) customers, business industry, and competitors
• Marketing Strategy and Implementation Summary: Discussion of marketing, sales, and pricing strategies
• Management and Organization Summary: Business ownership and operation. (If your business isn’t open yet, give a compelling reason why your background will make it a success. Include information on any managers in the business as well.)
• Financial Data and Analysis: Financial projections such as a profit and loss statement, projected cash flow, and business ratios
• Appendix: Any documents or information that doesn’t fit in the above categories goes in the appendix. You may want to include documents such as a floor plan, trademark, or marketing materials.

This might be a big undertaking for some, so there are business plan writing services you can seek help from. Alternatively, Here are some industry-specific business plan templates that can help:

• How To Write an SBA Business Plan [+Free Template]
• 4 Free Retail & Online Store Business Plans
• How to Write a Real Estate Business Plan (+ Free Template)

Learn More: How to Write a Business Plan

Step 4: Acquire Funding

Obtaining financing for your startup business may be the biggest challenge you face in your company’s infancy.

If you don’t have sufficient personal funds to start your business, you’ll need to secure additional funds. There are several funding options available for soon-to-be business owners, including several types of loans, investors, and crowdfunding.

No matter which type of startup financing your business applies for, you can increase the chances of getting a small business loan by preparing a solid business plan, improving your personal credit score , saving up personal capital, building your business’ customer base, and maintaining updated financial projections .

Family & Friends

A popular saying that many in startup financing like to say is, “You should always look to family, friends, and fools for funding before an investor or loan.” The reason is that family and friends (and fools) are the cheapest sources of capital.

The main downside of securing capital from family and friends is the potential for a damaged relationship. To avoid this, draw up an agreement that states how and when you need to pay back the funds.

A loan is a sum of money that needs to be paid back with interest. Business loan amounts can range anywhere from under $1,000 to over $1,000,000.

Just because you may qualify for a loan doesn’t mean you should use it. Start your small business with as little debt as possible. Remember, if your business were to fail, you would still need to pay off the debt you incurred, which could take several years.

Here are several different types of loans to fund your business:

• 10 Best Business Credit Cards for Startups
• 10 Best Sole Proprietorship Business Credit Cards
• 6 Best Instant Approval Business Credit Cards
• 6 Best Credit Cards for New Businesses With No Credit History
• 8 Best LLC Credit Cards
• 13 Best Small Business Credit Cards
• 6 Best Personal Loans for Business Funding
• Business Loans vs Personal Loans: Which Is Best for Your Small Business

See also: 7 Best Rollover for Business Startups (ROBS) Providers

• Home equity loan or line of credit : These loans pull equity out of your home for a loan. They are appealing because of their low-interest rate.

See also: SBA Microloans: What They Are & How to Apply

• SBA Loan Requirements
• How to Get an SBA Loan in 4 Steps
• How to Get an SBA Startup Loan in 6 Steps
• SBA Community Advantage Loan: What It Is & How to Apply
• Understanding the SBA Guarantee Fee

See also: How to Get Unsecured Startup Business Loans in 6 Steps

Find an Angel Investor

An angel investor is typically a wealthy individual who funds early-stage businesses. Investors usually want equity ownership in businesses they invest their money in. Having ownership means they will collect a percent of your profits in exchange for their investment. Read more about the pros and cons of angel investments .

Crowdfunding

Crowdfunding a small business is when you get customers to pre-order products or services. It’s a great way to raise funds before opening your business or creating a product.

Kickstarter and Indiegogo are crowdfunding platforms that assist with raising the money for your business. The cost to use the platforms is 5% of the final price raised plus payment processing fees, which are around 3%.

• Pros and Cons of Business Crowdfunding
• 11 Best Crowdfunding Sites for Small Businesses

Apply for Business Grants

Business grants are funds given to start a business that doesn’t have to be repaid. Federal, state, and local governments are common sources of grants. Many new business owners seek them, but they are hard to find.

A business grant is typically reserved for a particular type of business, such as a research-based business. Grants may also come in forms other than money, such as reduced rent to open a business in a disadvantaged area designated by a city.

• 8 Best Small Business Grants
• 8 Great Minority Small Business Grants
• 13 Best Small Business Grants for Women

Apply for Venture Capital Funding

Venture capital is private equity designed to help startups with long-term growth potential scale. In this arrangement, groups of investors pool money to fund a startup in exchange for equity. Typically, venture capitalist firms also shape the strategies of the companies, provide expertise, and make introductions. Read more about the disadvantages and advantages of venture capital funding .

Learn More: Startup Business Loans: The 7 Best Ways to Fund Your Startup

Step 5: Choose a Business Structure & Register Your Business

After acquiring funding, it is time to file the necessary legal paperwork and register your business. You want to take the steps below to comply with city, state, and federal laws. You also want to protect your personal assets if something happens in your business that results in a lawsuit. Additionally, if you have a unique business idea, you want to protect that from competitors.

The cost of registering a business varies between $40 to $500, depending on the state in which you choose to register. You can register through the state’s official business registration website. If you find the website challenging to navigate, use an online legal service such as Rocket Lawyer to assist with the process.

Registering your business is a must-do before taking on your first customer. You don’t want to start your business and not be properly prepared to deal with something like a trademark infringement or a home-based business inspection from a city official. To ensure the business registration process doesn’t become overwhelming, use our checklist to keep track of what has been accomplished and what needs to be completed.

Prepare to Register Your Business

This may only include obtaining an employment identification number (EIN), opening a business bank account, and registering the business as a legal entity in the state in which it operates.

Or registering your business can be several tasks including those above in addition to obtaining a professional business license, getting a State Taxpayer Identification Number, and passing a city health inspection. It’s best to prepare for these tasks in advance to ensure they go smoothly.

• Choose a business name. Before taking any legal steps below, you need to decide on your business name. This is important to do first because your business name will be on all of your legal documents. Know that you don’t have to stick with this name forever. If you’d like to change the public-facing name of your business, you can always file a DBA (doing business as) registration with the state in which your business is primarily located. Try our business name generator if you need help coming up with a name for your business.
• Choose a location to receive important documents. Your city or state may require certain documents to be signed and will mail them to you. Additionally, your state will mail documents to your address every year to remind you to re-register your business. It’s important to re-register on time because the late fee is often higher than the initial registration cost.
• Obtain your Employment Identification Number (EIN ). Your EIN is a federal business number provided by the Internal Revenue Service (IRS) to primarily identify your business for tax purposes. It’s free to obtain your EIN and you will use it on several documents. Many banks require an EIN before opening a business bank account.

See also: Can I Open a Business Bank Account Without an EIN?

• Open a business bank account. It’s important to open a business bank account before incurring any business expenses. This ensures you’re not mixing personal and business expenses. Many banks require a balance of at least $1,500 or they deduct a monthly fee.

Choose Your Business Structure

We recommend all businesses register as a legal entity, such as a limited liability company (LLC), S corporation, or C corporation. Registering your business as a legal entity protects your personal assets if a lawsuit were to ever occur against the business.

Research and determine the right type of legal entity for your business. While these legal entities have different pros and cons , they all achieve the vital goal of separating the business owner from personal financial liability if the business were sued or went bankrupt.

Here are the most common business structures:

• Sole proprietor: If you don’t register your business, this is the default business structure. Typically, only very low liability businesses should stay a sole proprietor, such as a beginner graphic designer or tutor.
• Partnership: Similar to a sole proprietor, except a partnership has two or more owners.
• LLC and LLP (legal entity) : This is similar to that of a sole proprietor, except it provides personal asset protection in the event of a lawsuit or business bankruptcy. An LLP (limited liability partnership) is for multiple partners.
• S corporation (tax status) : Elect your LLC or LLP as an S-corp to save money on taxes. Consider this structure if you are paying yourself more than $20,000 per year from the business.
• C corporation (legal entity) : This business structure provides several benefits, including transferable shares and perpetual existence. You’ll likely need to work with an attorney before forming a C-corp to create the needed documents.

Here is a snapshot of the different business structures you can consider and their key advantages and disadvantages.

Register Your Business With the State

Now that you’ve done the research and chosen your business’ legal entity, it’s time to submit the entity registration to the state it’s operating in. You can do this on your own by navigating to your state government’s business registration website. Or you can use an online legal service to assist you in the process. Additionally, if your business has a sales tax, you’ll want to obtain a state sales tax identification number (STIN).

Get State Licenses & Local Permits

Depending on your type of business, you may need a professional license issued by the state or a local permit. Additionally, if you work from home and receive customers or employees, you may need to obtain a work-from-home license.

• State professional licenses are typically for businesses that may pose a public health risk. Each state may require different professions to obtain a professional license.
• Local license and permit requirements vary by state; however, typically, before opening a physical location you’ll need a local building inspection to ensure the facility is safe for the public.
• A home-based business license is needed if you’re accepting employees and customers or creating products from your home. This license is to ensure the business isn’t causing a public health risk. However, Most businesses that operate from a home won’t need a license.

Secure Your Intellectual Property

Although it’s not necessary to start your business, you may want to register a trademark, copyright, or patent. A trademark ensures no other business uses your logo, business name, or tagline. A copyright gives you increased legal protection over your creative work. A patent ensures no one can take your product idea.

• Trademark Costs: DIY Registration vs Online Service vs Lawyer
• How Much Does a Patent Cost? The Beginner’s Guide

Step 6: Get Your Business Insured

Business insurance is a form of protection small business owners can buy to safeguard their personal or business assets. Getting the appropriate coverage for your operations protects your assets by covering customer lawsuits, property damage, and other perils so the costs following a disaster don’t put you out of business.

Most businesses deal with third parties who may claim your business caused their property damage, bodily harm, or financial loss. Different types of business insurance cover these accusations by paying the associated costs.

Certain small business insurance policies are considered fundamental because they protect against risks that most business owners face. General liability is a good example of this because it covers claims that your business is responsible for someone else’s damages. Many business owners also get commercial property insurance because it pays for damages to their property.

Common Types of Small Business Insurance Policies

How to get business insurance.

Small business owners can get business insurance online through brokers or directly from carriers. To get the appropriate coverage for your business, it’s important to first assess your risks and then to find providers who offer coverage that protects against them.

• 6 Best Small Business Insurance Companies
• 6 Ways To Save Money on Business Insurance

Because no business is immune to general liability claims, getting coverage should be a standard business practice. However, cash-strapped small business owners who are looking for inexpensive general liability insurance should remember that price shouldn’t be the only consideration. Smart business owners evaluate coverage limits, additional fees, and the carrier’s reputation as well.

Step 7: Build Your Business Team

After taking care of the necessary legal steps to get your business registered and protected, it is now time to make key hires. Your first employees will be vital to the success of your business. Additionally, many new business owners overlook the importance of hires outside of the business such as a bookkeeper, attorneys, and mentors.

Connect With a Business Attorney

A business attorney may help you form your new business, create custom forms or contracts, and provide legal advice. Even if you won’t need an attorney for these activities, it’s wise to connect with one before a legal matter occurs in your business. You don’t want the stress of interviewing business attorneys after your company has been served.

Meet With a No-cost Business Adviser

The federal and state government funds several organizations that provide no-cost business consulting and mentoring. The SBDC has over 5,000 consultants across the United States that provide no-cost consulting in a variety of business areas. These consultants typically have advanced education or experience owning a business.

SCORE Advisers are volunteers who typically have previously owned a business. They serve as mentors to business owners. A SCORE Adviser can be a great asset to your business, especially if they have experience in your industry.

Hire Your First Employee

Hiring great employees is the key to growing your business. A thoughtful hiring process includes well-written job descriptions, effective recruitment ads, and strong interview processes, all of which should promote your values and culture and adhere to fair labor practices.

Many first-time business owners find employees online these days —through job boards , LinkedIn , Facebook, and Instagram. You will likely hire your first employee through word-of-mouth or from one of your family members or friends .

• How to Hire Employees
• How to Create a New Hire Checklist [+ Free Template]
• 10 Best Startup Hiring Tips for Finding Top Candidates
• Hiring Bias: 13 Unfair Prejudices & How to Avoid Them
• New Employee Onboarding Best Practices: Steps & Checklist

Hire a Bookkeeper or Accountant

If you’re starting a part-time business, you can likely track your income and expenses with software such as QuickBooks Online. However, if you have a full-time business with multiple products and services and have several expenses to track, you may want to hire a professional.

Many new business owners are unsure if they should hire a bookkeeper or accountant, but most people starting a small business only need a bookkeeper . If you need complicated financial statements or business tax advice, it’s wise to hire a certified public accountant (CPA).

Step 8: Set Up Your Business Systems & Software

As you organize your business, you will find yourself creating systems to manage repeatable tasks and ultimately increase profits . You’ll often find software to assist with the tasks.

Below you’ll find two lists—one with processes and systems that almost all new small businesses will need to implement. The second list includes several systems and software that—if they apply to you—are highly recommended.

Must-have Systems & Software

• Payment processing: You’ll need this to accept credit card payments . Sign up with a merchant service provider before setting this up.
• Bookkeeping: This is how you track income and expenses. If you are managing it yourself, you’ll need accounting software . If not managing yourself, consider hiring a virtual bookkeeper .
• Payroll processing: If you have employees, you’ll use this system to pay them. To make the process easier, consider payroll processing software .
• Business tax payments: It’s a best practice to make business tax payments to the IRS quarterly so you don’t have a large tax bill at the end of the year. Aside from tax software , you can often use your accounting and payroll software to submit early tax payments.
• Business phone number: You’ll want to secure a business phone number so that you can separate personal calls from business calls. You can get a virtual phone line for free or for a small fee .
• Branded business email address: You don’t want potential customers to email a “@gmail,” “@yahoo,” or another alternative. It looks unprofessional. Get a business email that ends with “@yourcompanyname” so that it looks more professional . Google Workspace provides this for $6 a month.

Additional Systems & Software to Consider

• Business website: If potential customers are typing your business name into the search engines, you need a business website . You can set one up yourself and pay around $15 a month. Here are small business website examples you can use for inspiration.
• Sell online: Expand your products’ or services’ reach by selling to customers online . You can build an ecommerce website or use a platform such as Amazon , Facebook Shop , Instagram , or Etsy .
• Customer management: If you have dozens of customers (or more), you’ll need customer relationship management (CRM) software . This software helps you keep track of customer information such as previous communications and contact info.
• Appointment scheduling: Don’t schedule appointments by hand (unless you want to). Use free appointment scheduling software to store your appointments in the cloud. Also, allow clients to schedule online without communicating with you.
• Work from home: COVID-19 is forcing and encouraging many people to work from home for the first time. Set up your home office and manage it so that you can keep up productivity and enjoy your working environment.
• Take video calls: Video meetings and calls have skyrocketed since the pandemic arrived. Give your clients the option to meet through video conferencing software .

Overwhelmed? Don’t be. Free business software helps your company save money and become efficient. You can use free business tools to do accounting, accept payments, and pay employees.

If you’re starting a business, going with free business tools is a great way to keep operating expenses at a minimum. Free business tools are a low-risk test as you figure out the best systems and software for you. If you like them, keep them and possibly expand their features with a paid version. If you don’t like them, stop using the software with no added costs to your business.

Step 9: Market Your Business

Your last step to starting your business is to get customers. You’ll use your marketing strategy to get your new business in front of potential customers.

There are a lot of strategies you can implement to get your business noticed. Don’t get overwhelmed! Remember, you don’t have to implement—and pay for—all of these strategies. A few done well will get your business enough customers to make it a success.

Before diving headfirst into any of the marketing strategies, take time to write a marketing plan . Think through and plan out how you want to market your business. In your plan, outline your brand, such as the logo, colors, font, and tagline.

At a minimum, you’ll want to create business cards to hand out to potential customers and vendors or while networking. Other marketing materials to consider are brochures , flyers , cards , and branded apparel. Many new business owners make the mistake of relying too much on online marketing. Don’t overlook the effectiveness of having physical business marketing materials in someone’s home.

Market Online

• Social media marketing : Connect with your customers where they are spending their time online. Don’t try to grow a following on all social media platforms. Choose one and spend the majority of your time growing your account there.
• Email marketing : Stay in touch with past customers by sending them valuable or entertaining emails . Don’t make your emails all about sales and discounts. You’ll lose subscribers.
• Content marketing : Create and distribute articles, videos, case studies, and other forms of online content created to attract leads, create brand awareness, move prospects through the buying journey, or convert them to customers.
• Google My Business (GMB) listing : This listing is free for all businesses looking for local customers. Many marketers are calling GMB the new small business “homepage.” It’s what customers see on Google before your website when they search for your business.
• Online directories : It’s likely your business can be on several online directories such as Yelp and Yellow Pages . Consider any industry-specific directories as well.

Network With Local Businesses

When you first open, explore networking groups available for local businesses. It’s always a good idea to meet and network with other business owners. Word-of-mouth recommendations and referrals may lead to some of your first customers.

Related: 8 Business Networking Statistics to Generate New Opportunities

Pay for Advertising

You may want to pay to get your business in front of ideal customers. This paid marketing can give your brand recognition a jump-start. You can pay for advertising online or through traditional advertising channels.

• Search engine ads : Pay to get your business at the top of Google or Microsoft . Typically, you will pay every time an interested searcher clicks on your ad. The cost of the click will depend on the number of businesses competing for the ad space.
• Social media ads : Get your social media ad in front of both followers and nonfollowers. Ad cost depends on the competitiveness of the audience you’re targeting.
• Online directory leads: Depending on the directory, you can pay for higher rankings or leads. Yelp provides both options.
• Direct mail : Create cards or brochures and send them to homes of potential customers near your business.
• Radio ads : This type of advertising is an excellent option if your business appeals to an audience in a broad industry such as retail or home improvement.
• Billboards : The cost of a billboard varies depending on location. Pay anywhere from $250 per month for a rural area to over $15,000 per month in a larger market.

Media Package

You want local media to know about your new business. Local media prefers information about your business submitted to them in a press release. A press release is a summary and story of your business. You also want to include owner headshots and photos of the business in the press kit . It’s important to include a hook, which is a way to present your business that creates interest so that the business journalist will cover the opening of your startup.

Learn More: 11 Strategies to Market a New Business

How to Start a Small Business Frequently Asked Questions (FAQs)

Click through the questions below to get answers to some of your most frequently asked starting a small business questions.

How can I start a small business with no money?

A business can be started with no money, but it is not recommended. You aren’t required to spend money to register your business. When you don’t register, it is called a sole proprietorship. The problem with not registering is that your personal assets are at risk. For example, if you’re starting a lawn care business and something costly gets destroyed at a customer’s property, that customer can sue you for damages, and your personal assets are at risk.

What is the easiest business to start up?

The easiest business to start is one that relies on your expertise. People pay you for your expertise because you know more than they do. For example, if you are a social media manager for a business, you can take your social media marketing expertise and charge local businesses to manage their accounts.

There is little cost to this type of business because your time and expertise are the product.

How much does it cost to start a small business?

Starting a business does not need to cost a lot of money. If you’re providing a service like resume writing, the only cost is registering the business in your state. As you add additional components to your business like a website, accounting software, and a branded email address, your business costs will increase. For example, adding a low-cost website is another $100 or more per year. A branded email address will cost another $100 or more per year.

If you’re feeling overwhelmed with all the tasks to start your business, don’t stress! Starting a business is a marathon, not a sprint. Be patient. Give yourself time to absorb and understand the above steps.

“The truth is, success is a process—you can ask anybody who’s been successful.” – Oprah Winfrey

Be proud that you’re learning and trying to figure out this messy world of starting a business. Make your next move today: What micro-step are you taking today to make your idea a reality?

About the Author

Find Agatha On LinkedIn

Agatha Aviso

Agatha Aviso is a retail software expert writer at Fit Small Business. She specializes in evaluating ecommerce and retail software features that help small businesses grow. She has evaluated dozens of the top software for retail SMBs. Agatha has more than 10 years of experience writing online content for both small business owners as well as the marketing industry. She also served as a content strategist and digital marketing manager for many entrepreneurs.

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The Importance of Market Research

Creating a business plan, legal requirements, exploring funding options, crafting a marketing strategy, managing and growing your business, how do i start a small business for beginners, how do i create a business plan, what are six ways to grow and scale a business, the bottom line.

• Small Business
• How to Start a Business

Starting a Small Business: Your Complete How-to Guide

From market research to managing growth

The U.S. is home to 33.2 million small businesses, which drive over 43% of GDP.   If you are looking to start a business, there are key factors to consider—from market research and creating a business plan to scaling your business. These factors are critical to your journey and can make a big difference no matter what stage of the process you are in.

Entrepreneurs who take concrete action can differentiate themselves from competitors, innovate, and grow. For successful entrepreneurs, the execution of the business is often what means the most. 

Key Takeaways

• Starting a small business involves extensive market research of your target audience, competitors, and gaining a deep understanding of the industry.
• It is important to build a comprehensive business plan that includes the product or service description, your target customers, financial projections, and all other key details.
• Understanding the legal requirements of starting your business involves knowledge of business registration, permits, licensing, and other regulatory requirements.
• There are various types of funding channels for starting a business, including financing it yourself, securing external funding from your network, and applying for government and corporate grants and loans. 

Being clear about your business goals involves doing your research. Successful entrepreneurs often do extensive research on their field. This includes understanding their prospective customers, the technical aspects of the industry, and the challenges other businesses are facing. 

Understanding how other players operate in an industry is important. Attending conferences, joining associations, and building a network of people involved in the field can help you learn how decisions are made. Often, comprehensive market research takes six months to a year. 

Understanding Your Target Audience

Knowing your target market is critical for many reasons. These are the customers who are most likely to purchase your product, recommend it to friends, and become repeat buyers. Apart from driving your bottom line, having a strong understanding of your target audience will allow you to tailor your offering more effectively, reach your customers more efficiently, and manage customer expectations.

Compiling demographic data on age, family, wealth, and other factors can give you a clearer understanding of market demand for your product and your potential market size.

It’s important to ask, “Why would someone buy this and part with their discretionary income?” or “Will someone love this enough to tell someone about it?” At the heart of these questions is understanding whether your business solves a key problem, as well as whether it delivers the “more” that connects to your audiences’ human emotions.

Assessing Market Trends and Opportunities

To find an advantage in a given market, look at key market trends in customer behavior and the business landscape. Explore the state of business conditions and consumer spending, along with the economic environment and how interest rates may affect financing and business growth.

Several resources are available to dive into market trends across industries, such as Statistics of U.S. Businesses and the U.S. Census Business Builder . To analyze the competitive landscape, and in turn, identify key opportunities, Porter's 5 Forces is a classic model to help businesses build their competitive strategy.

A business plan is a road map for achieving your business goals. It outlines the capital that you need, the personnel to make it happen, and the description of your product and prospective customers.

There are a number of models for creating a business plan. The Small Business Administration (SBA) , for instance, provides a format that includes the following nine sections:

• Executive summary: This should be a description of your company and its potential for success. The executive summary can cover your mission statement, employees, location, and growth plan.
• Company description: This is where you detail what your business offers, its competitive advantages, and your strengths as a business.
• Market analysis: Lay out how your company is positioned to perform well in your industry. Describe market trends and themes and your knowledge of successful competitors.
• Organization and management: Who is running your company, and how is your business structured? Include an organizational chart of your management team. Discuss if your business will be incorporated as a business C or S corporation, a limited partnership, a limited liability company, or a sole proprietorship. 
• Service or product line: Here is where you describe how your business will solve a problem and why this will benefit customers. Describe how your product lifecycle would unfold.
• Marketing and sales: Detail your marketing strategy and how this will reach your customers and drive return on investment. 
• Funding request: If you're looking for financing, lay out the capital you’re requesting under a five-year horizon and where, in detail, it will be allocated, such as salaries, materials, or equipment. 
• Financial projections: This section shows the five-year financial outlook for your company and ties these to your request for capital.

Having a coherent business plan is important for businesses looking to raise cash and crystallize their business goals.

Setting Goals and Strategies

Another key aspect of a business plan is setting realistic goals and having a strategy to make these a reality. Having a clear direction will help you stay on track within specified deadlines. In many ways, it allows companies to create a strategic plan that defines measurable actions and is coupled with an honest assessment of the business, taking into account its resources and competitive environment. Strategy is a top-down look at your business to achieve these targets.

Financial Projections and Budgeting

Often, entrepreneurs underestimate the amount of funding needed to start a business. Outlining financial projections shows how money will be generated, where it will come from, and whether it can sustain growth. 

This provides the basis for budgeting the costs to run a business and get it off the ground. Budgeting covers the expenses and income generated from the business, which include salaries and marketing expenses and projected revenue from sales.

Another important aspect of starting a business are the legal requirements that enable you to operate under the law. The legal structure of a business will impact your taxes, your liability, and how you operate.

Businesses may consider the following structures in which to operate:

• Corporation
• Limited Liability Company (LLC)
• Partnership
• Sole Proprietorship

Each has different legal consequences, from regulatory burdens to tax advantages to liability being shifted to the business instead of the business owner.

Registering Your Business

Now that you have your business structure outlined, the next step is registering your business . Your location is the second key factor in how you’ll register your business. In many cases, small businesses can register their business name with local and state government authorities. 

If your business is being conducted under your legal name, registration is not required. However, such a business structure may not benefit from liability protection, along with certain legal and tax advantages. Often, registering your businesses costs $300 or less.

Before filing, a business structured as a corporation, LLC, or partnership requires a registered agent in its state. These agents handle the legal documents and official papers on your behalf.

Businesses that are looking to trademark their product, brand, or business, can file with the United States Patent and Trademark Office.

Understanding Permits and Licenses

If your business conducts certain activities that are regulated by a federal agency, you’re required to get a permit or license. A list of regulated activities can be found on the SBA website, and includes activities such as agriculture, alcoholic beverages, and transportation.

There are many different ways to fund a business. One of the key mistakes entrepreneurs make is not having enough capital to get their business running . The good news is that there are several channels to help make this happen, given the vital role entrepreneurs play in creating jobs and boosting productivity in the wider economy.

Self-Funding vs. External Funding

Bootstrapping, the term commonly used to describe self-funding your business, is where companies tap into their own cash or network of family and friends for investment. While the advantage of self-funding is having greater control, the downside is that it often involves more personal risk.

External funding involves funding from bank loans, crowdfunding, or venture capital , among other sources. These may provide additional buffers and enable you to capture growth opportunities. The drawback is less freedom and more stringent requirements for paying back these funds.

Grant and Loan Opportunities

Today, there are thousands of grants designed especially for small businesses from the government, corporations, and other organizations. The U.S. Chamber of Commerce provides a weekly update of grants and loans available to small businesses. 

For instance, Business Warrior offers loans between $5,000 and $50,000 to small business owners. As another example, Go. Be. Elevate Fund offers $4,000 to grant recipients who are women and/or people of color business owners to help them grow their businesses.

When it comes to marketing, there is a classic quote from Milan Kundera: “Business has only two functions—marketing and innovation." In order to reach customers, a business needs a marketing strategy that attracts and retains customers and expands its customer base.

To gain an edge, small businesses can utilize social media, email marketing, and other digital channels to connect and engage with customers.

Branding Your Business

Building a successful brand goes hand in hand with building a great experience for the customer. This involves meeting the expectations of your customer. What is your brand offering? Is it convenience, luxury, or rapid access to a product? Consider how your brand meets a customer's immediate need or the type of emotional response it elicits. Customer interaction, and in turn loyalty to your brand, is influenced, for example, by how your brand may align with their values, how it shifts their perception, or if it resolves customer frustration.

Digital Marketing and Social Media

We live in a digital-first world, and utilizing social media channels can help your business reach a wider audience and connect and engage in real time. Given that a strong brand is at the heart of successful companies, it often goes without saying that cultivating a digital presence is a necessity in order to reach your customers. 

According to HubSpot’s 2023 report, The State of Consumer Trends, 41% of the 600-plus consumers surveyed discovered new products on social media and 17% bought a product there in the past three months.

Managing a business has its challenges. Finding the right personnel to run operations, manage the day-to-day, and reach your business objectives takes time. Sometimes, businesses may look to hire experts in their field who can bring in specialized knowledge to help their business grow, such as data analysts, marketing specialists, or others with niche knowledge relevant to their field.

Hiring and Training Staff

Finding the right employees involves preparing job descriptions, posting on relevant job boards such as LinkedIn, and effectively screening applicants. Careful screening may involve a supplemental test, reviewing a candidate's portfolio, and asking situational and behavioral questions in the interview. These tools will help you evaluate applicants and improve the odds that you'll find the people you are looking for.

Once you have hired a new employee, training is the next essential step. On average, it takes about 62 hours to train new employees. Effectively training employees often leads to higher retention. While on-the-job training is useful, consider having an onboarding plan in place to make the transition clear while outlining expectations for the job.

Scaling Your Business

Growing your business also requires strategy. According to Gino Chirio, executive vice president at the consultancy group Maddock Douglas, there are six ways that companies can grow their business to drive real growth and expansion:

• New processes: Boost margins by cutting costs.
• New experiences: Connect with customers in powerful ways to help increase retention.
• New features: Provide advancements to your existing product or service.
• New customers: Expand into new markets, or find markets where your product addresses a different need.
• New offerings: Offer a new product.
• New models: Utilize new business models, such as subscription-based services, fee-for-service, or advertising-based models.

With these six ways to grow a business, it is important to consider the risk, investment, and time involved. Improving your margins through new processes is often the most straightforward way to grow. Offering new features is also effective since it is tailored to your existing market with products you have already delivered.

By contrast, offering new products may involve higher risk since these have not been tested in the market. However, they may offer higher reward, especially if you have a first-mover advantage and release your product in the market before the competition.

A good place to start building a business is to understand the following core steps that are involved in an entrepreneur's journey : market research, creating a business plan, knowing the legal requirements, researching funding options, developing a marketing strategy, and business management.

A business plan is made up of a number of primary components that help outline your business goals and company operations in a clear, coherent way. It includes an executive summary, company description, market analysis, organization and management description, service or product line description, marketing and sales plan, funding requests (optional), and financial projections.

Business growth can fall into the following six categories, with each having varying degrees of risk and investment: new processes, new experiences, new features, new customers, new offerings, and new models.

Knowing how to start a small business involves the key steps of market research, setting up a business plan, understanding the legal requirements, exploring funding options, crafting a marketing strategy, and managing your business. 

For aspiring small business owners, these steps can help you successfully deliver your product or service to the market, and ultimately grow. While it can take a considerable amount of work, the payoffs are manifold: independence of work, personal fulfillment, financial reward, and following your passion.

U.S. Chamber of Commerce. " The State of Small Business Now ."

U.S. Small Business Administration. " Market Research and Competitive Analysis ."

U.S. Small Business Administration." Write Your Business Plan ."

U.S. Small Business Administration. " Choose a Business Structure ."

U.S. Small Business Administration. " Register Your Business ."

U.S. Small Business Administration. " Apply for Licenses and Permits ."

U.S. Small Business Administration. " Fund Your Business ."

U.S. Chamber of Commerce. " 52 Grants, Loans and Programs to Benefit Your Small Business ."

Ogilvy. " Behind Every Brand Is a Great Experience, and Vice Versa—Why Today's Customer Expects Synergy ."

HubSpot. " The State of Consumer Trends in 2023 ."

Training Magazine. " 2022 Training Industry Report ."

Harvard Business Review. " The Six Ways to Grow a Company ."

• How to Start a Business: A Comprehensive Guide and Essential Steps 1 of 25
• How to Do Market Research, Types, and Example 2 of 25
• Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
• Marketing in Business: Strategies and Types Explained 4 of 25
• What Is a Marketing Plan? Types and How to Write One 5 of 25
• Business Development: Definition, Strategies, Steps & Skills 6 of 25
• Business Plan: What It Is, What's Included, and How to Write One 7 of 25
• Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
• How to Write a Business Plan for a Loan 9 of 25
• Business Startup Costs: It’s in the Details 10 of 25
• Startup Capital Definition, Types, and Risks 11 of 25
• Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
• Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
• Starting a Business with No Money: How to Begin 14 of 25
• A Comprehensive Guide to Establishing Business Credit 15 of 25
• Equity Financing: What It Is, How It Works, Pros and Cons 16 of 25
• Best Startup Business Loans 17 of 25
• Sole Proprietorship: What It Is, Pros and Cons, and Differences From an LLC 18 of 25
• Partnership: Definition, How It Works, Taxation, and Types 19 of 25
• What Is an LLC? Limited Liability Company Structure and Benefits Defined 20 of 25
• Corporation: What It Is and How to Form One 21 of 25
• Starting a Small Business: Your Complete How-to Guide 22 of 25
• Starting an Online Business: A Step-by-Step Guide 23 of 25
• How to Start Your Own Bookkeeping Business: Essential Tips 24 of 25
• How to Start a Successful Dropshipping Business: A Comprehensive Guide 25 of 25

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How to Start a Business: A Step-by-Step Guide

Table of Contents

• You should prepare thoroughly before starting a business, but realize that things will almost certainly go awry. To run a successful business, you must adapt to changing situations.
• Learning how to start your own business involves conducting in-depth market research on your field and the demographics of your potential clientele is an important part of crafting a business plan.
• In addition to selling your product or service, you need to build up your brand and get a following of people who are interested in what your business offers.
• This article is for anyone who wants to learn how to start a business.

Starting a business can be hard work, but if you break down the process of launching your new company into individual steps you can make it easier. Rather than spinning your wheels and guessing where to start, you can follow the tried and true methods of entrepreneurs who’ve done it successfully. If you want to learn how to start your own business, follow this 10-step checklist to transform your business from a lightbulb above your head into a real entity.

Starting a business is a lot of work, but we’re here to help! Check out our useful resources for everything you need to successfully build your business from the ground up.

• 11 Things To Do Before Starting A Business
• Tax and Business Forms You’ll Need To Start A Business
• 20 Mistakes To Avoid When Starting A Business

How to start a business

1. refine your idea..

If you’re thinking about starting a business, you likely already have an idea of what you want to sell online , or at least the market you want to enter. Do a quick search for existing companies in your chosen industry. Learn what current brand leaders are doing and figure out how you can do it better. If you think your business can deliver something other companies don’t (or deliver the same thing, only faster and cheaper), you’ve got a solid idea and are ready to create a business plan. 

Define your “why?”

“In the words of Simon Sinek, ‘always start with why,’” Glenn Gutek, CEO of Awake Consulting and Coaching, told Business News Daily. “It is good to know why you are launching your business. In this process, it may be wise to differentiate between [whether] the business serves a personal why or a marketplace why. When your why is focused on meeting a need in the marketplace, the scope of your business will always be larger than a business that is designed to serve a personal need.” 

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Consider franchising.

Another option is to open a franchise of an established company. The concept, brand following and business model are already in place; you only need a good location and the means to fund your operation.

Brainstorm your business name.

Regardless of which option you choose, it’s vital to understand the reasoning behind your idea. Stephanie Desaulniers, owner of Business by Dezign and former director of operations and women’s business programs at Covation Center, cautions entrepreneurs against writing a business plan or brainstorming a business name before nailing down the idea’s value.

Editor’s note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs.

Clarify your target customers.

Desaulniers said too often, people jump into launching their business without spending time to think about who their customers will be and why those customers would want to buy from them or hire them.

“You need to clarify why you want to work with these customers — do you have a passion for making people’s lives easier?” Desaulniers said. “Or enjoy creating art to bring color to their world? Identifying these answers helps clarify your mission. Third, you want to define how you will provide this value to your customers and how to communicate that value in a way that they are willing to pay.” 

During the ideation phase, you need to iron out the major details. If the idea isn’t something you’re passionate about or if there’s no market for your creation, it might be time to brainstorm other ideas.

Tip: To refine your business idea, identify your “why,” your target customers and your business name.

2. Write a business plan.

Once you have your idea in place, you need to ask yourself a few important questions: What is the purpose of your business? Who are you selling to? What are your end goals? How will you finance your startup costs? These questions can be answered in a well-written business plan . 

Fledgling business owners can make a lot of mistakes by rushing into things without pondering these aspects of the business. You need to find your target customer base. Who is going to buy your product or service? What would be the point if you can’t find evidence of a demand for your idea? 

This business plan template can help you launch and grow your business the right way.

Conduct market research.

Conducting thorough market research on your field and the demographics of your potential clientele is an important part of crafting a business plan. This involves conducting surveys, holding focus groups, and researching SEO and public data. 

Market research helps you understand your target customer — their needs, preferences and behavior — as well as your industry and competitors. Many small business professionals recommend gathering demographic information and conducting a competitive analysis to better understand opportunities and limitations within your market. 

The best small businesses have differentiated products or services from the competition. This significantly impacts your competitive landscape and allows you to convey unique value to potential customers.

Consider an exit strategy.

It’s also a good idea to consider an exit strategy as you compile your business plan. Generating some idea of how you’ll eventually exit the business forces you to look to the future. 

“Too often, new entrepreneurs are so excited about their business and so sure everyone everywhere will be a customer that they give very little, if any, time to show the plan on leaving the business,” said Josh Tolley, CEO of both Shyft Capital and Kavana. 

“When you board an airplane, what is the first thing they show you? How to get off of it. When you go to a movie, what do they point out before the feature begins to play? Where the exits are. During your first week of kindergarten, they line up all the kids and teach them fire drills to exit the building. Too many times I have witnessed business leaders that don’t have three or four predetermined exit routes. This has led to lower company value and even destroyed family relationships.” 

A business plan helps you figure out where your company is going, how it will overcome any potential difficulties, and what you need to sustain it. When you’re ready to put pen to paper, use a free template to help.

3. Assess your finances.

Starting any business has a price, so you need to determine how you will cover those costs. Do you have the means to fund your startup, or will you need to borrow money? If you’re planning to leave your current job to focus on your business, do you have savings to support yourself until you make a profit? Find out how much your startup costs will be. 

Many startups fail because they run out of money before turning a profit. It’s never a bad idea to overestimate the amount of startup capital you need, as it can take time before the business begins to bring in sustainable revenue. 

Perform a break-even analysis.

One way you can determine how much money you need is to perform a break-even analysis. This essential element of financial planning helps business owners determine when their company, product or service will be profitable. 

The formula is simple:

• Fixed Costs ÷ (Average Price Per Unit – Variable Costs) = Break-Even Point

Every entrepreneur should use this formula as a tool because it tells you the minimum performance your business must achieve to avoid losing money. Furthermore, it helps you understand exactly where your profits come from, so you can set production goals accordingly. 

Here are the three most common reasons to conduct a break-even analysis: 

Ask yourself: How much revenue do I need to generate to cover all my expenses? Which products or services turn a profit, and which ones are sold at a loss?

Ask yourself: What are the fixed rates, what are the variable costs, and what is the total cost? What is the cost of any physical goods? What is the cost of labor?

Ask yourself: How can I reduce my overall fixed costs? How can I reduce the variable costs per unit? How can I improve sales? 

Watch your expenses.

Don’t overspend when starting a business. Understand the types of purchases that make sense for your business and avoid overspending on fancy new equipment that won’t help you reach your business goals. Monitor your business expenses to ensure you are staying on track.

“A lot of startups tend to spend money on unnecessary things,” said Jean Paldan, founder and CEO of Rare Form New Media. “We worked with a startup with two employees but spent a huge amount on office space that would fit 20 people. They also leased a professional high-end printer that was more suited for a team of 100; it had key cards to track who was printing what and when. Spend as little as possible when you start, and only on the things essential for the business to grow and succeed. Luxuries can come when you’re established.”  

Using accounting software can streamline your expense tracking. Read our reviews of the best accounting software to learn more and find the right platform for your needs. Try starting with our Intuit QuickBooks Online review — this vendor is our top pick for small businesses.

Consider your funding options.

Startup capital for your business can come from various means. The best way to acquire funding for your business depends on several factors, including creditworthiness, the amount needed and available options.

• Business loans. If you need financial assistance, a commercial loan through a bank is a good starting point, although these are often difficult to secure. If you cannot take out a bank loan, apply for a small business loan through the S. Small Business Administration (SBA) or an alternative lender. [Read related article: Best Business Loans ]
• Business grants. Business grants are similar to loans, but do not need to be paid back. Business grants are typically very competitive and come with stipulations that the business must meet to be considered. When securing a small business grant , look for ones specific to your situation. Options include minority-owned business grants, grants for women-owned businesses and government grants .
• Startups that require significant funding up front may want to bring on an angel investor . Investors can provide several million dollars or more to a fledgling company in exchange for a hands-on role in running your business.
• Alternatively, you can launch an equity crowdfunding campaign to raise smaller amounts of money from multiple backers. Crowdfunding has helped numerous companies in recent years, and dozens of reliable crowdfunding platforms are designed for different types of businesses. 

You can learn more about each of these capital sources and more in our guide to startup finance options . 

Choose the right business bank.

When you’re choosing a business bank , size matters. Marcus Anwar, co-founder of OhMy Canada, recommends smaller community banks because they are in tune with the local market conditions and will work with you based on your overall business profile and character. 

“They’re unlike big banks that look at your credit score and will be more selective to loan money to small businesses,” Anwar said. “Not only that, but small banks want to build a personal relationship with you and ultimately help you if you run into problems and miss a payment. Another good thing about smaller banks is that decisions are made at the branch level, which can be much quicker than big banks, where decisions are made at a higher level.” 

Anwar believes that you should ask yourself these questions when choosing a bank for your business: 

• What is important to me?
• Do I want to build a close relationship with a bank that’s willing to help me in any way possible?
• Do I want to be just another bank account, like big banks will view me as? 

Ultimately, the right bank for your business comes down to your needs. Writing down your banking needs can help narrow your focus to what you should be looking for. Schedule meetings with various banks and ask questions about how they work with small businesses to find the best bank for your business. [Read related article: Business Bank Account Checklist: Documents You’ll Need ]

Financially, you should perform a break-even analysis, consider your expenses and funding options, and choose the right bank for your business.

4. Determine your legal business structure.

Before registering your company, you need to decide what kind of entity it is. Your business structure legally affects everything from how you file your taxes to your personal liability if something goes wrong. 

• Sole proprietorship: You can register for a sole proprietorship if you own the business independently and plan to be responsible for all debts and obligations. Be warned that this route can directly affect your personal credit.
• Partnership: Alternatively, as its name implies, a business partnership means that two or more people are held personally liable as business owners. You don’t have to go it alone if you can find a business partner with complementary skills to your own. It’s usually a good idea to add someone into the mix to help your business flourish.
• Corporation: If you want to separate your personal liability from your company’s liability, consider the pros and cons of corporations (e.g., an S corporation or C corporation ). Although each type of corporation is subject to different guidelines, this legal structure generally makes a business a separate entity from its owners. Therefore, corporations can own property, assume liability, pay taxes, enter contracts, sue and be sued like any other individual. “Corporations, especially C corporations, are especially suitable for new businesses that plan on ‘going public’ or seeking funding from venture capitalists in the near future,” said Deryck Jordan, managing attorney at Jordan Counsel.
• Limited liability company: One of the most common structures for small businesses is the limited liability company (LLC). This hybrid structure has the legal protections of a corporation while allowing for the tax benefits of a partnership. 

Ultimately, it is up to you to determine which type of entity is best for your current needs and future business goals. It’s important to learn about the various legal business structures available. If you’re struggling to make up your mind, discussing the decision with a business or legal advisor is a great idea.

Did you know? You need to choose a legal structure for your business, such as a sole proprietorship, partnership, corporation or LLC .

5. Register with the government and IRS.

You will need to acquire business licenses before you can legally operate your business. For example, you must register your business with federal, state and local governments. There are several documents you must prepare before registering.

Articles of incorporation and operating agreements

To become an officially recognized business entity, you must register with the government. Corporations need an articles of incorporation document, which includes your business name, business purpose, corporate structure, stock details and other information about your company. Similarly, some LLCs will need to create an operating agreement.

Doing business as (DBA)

If you don’t have articles of incorporation or an operating agreement, you will need to register your business name, which can be your legal name, a fictitious DBA name (if you are the sole proprietor), or the name you’ve come up with for your company. You may also want to take steps to trademark your business name for extra legal protection. 

Most states require you to get a DBA. You may need to apply for a DBA certificate if you’re in a general partnership or a sole proprietorship operating under a fictitious name. Contact or visit your local county clerk’s office to ask about specific requirements and fees. Generally, there is a registration fee involved. 

Employer identification number (EIN)

After you register your business, you may need to get an employer identification number from the IRS. While this is not required for sole proprietorships with no employees, you may want to apply for one anyway to keep your personal and business taxes separate, or to save yourself the trouble if you decide to hire someone later on. The IRS has provided a checklist to determine whether you will require an EIN to run your business. If you do need an EIN, you can register online for free. 

Income tax forms

You must file certain forms to fulfill your federal and state income tax obligations . Your business structure determines the forms you need. You will need to check your state’s website for information on state-specific and local tax obligations. Once you set this all up, the best online tax software can help you file and pay your taxes quarterly and annually.

“You might be tempted to wing it with a PayPal account and social media platform, but if you start with a proper foundation, your business will have fewer hiccups to worry about in the long run,” said Natalie Pierre-Louis, licensed attorney and owner of NPL Consulting. 

Federal, state, and local licenses and permits

Some businesses may also require federal, state or local licenses and permits to operate. Your local city hall is the best place to obtain a business license. You can then use the SBA’s database to search for state and business type licensing requirements. 

Businesses and independent contractors in certain trades are required to carry professional licenses. A commercial driver’s license (CDL) is one example of a professional business license. Individuals with a CDL can operate certain types of vehicles, such as buses, tank trucks and tractor-trailers. A CDL is divided into three classes: Class A, Class B and Class C. 

You should also check with your city and state to find out if you need a seller’s permit that authorizes your business to collect sales tax from your customers. A seller’s permit goes by numerous names, including resale permit, resell permit, permit license, reseller permit, resale ID, state tax ID number, reseller number, reseller license permit or certificate of authority. 

It’s important to note that these requirements and names vary from state to state. You can register for a seller’s permit through the state government website of the state(s) you’re doing business in. 

Jordan says that not all businesses need to collect sales tax (or obtain a seller’s permit).

“For example, New York sales tax generally is not required for the sale of most services (such as professional services, education, and capital improvements to real estate), medicine or food for home consumption,” Jordan said. “So, for example, if your business only sells medicine, you do not need a New York seller’s permit. But New York sales tax must be collected in conjunction with the sale of new tangible personal goods, utilities, telephone service, hotel stays, and food and beverages (in restaurants).”

Register key documents like articles of incorporation or an operating agreement, a DBA, an EIN, income tax forms, and other applicable licenses and permits.

6. Purchase an insurance policy.

It might slip your mind as something you intend to get around to eventually, but purchasing the right insurance for your business is an important step to take before you officially launch. Dealing with incidents such as property damage, theft or even a customer lawsuit can be costly, and you need to be sure that you’re properly protected. 

Although you should consider several types of business insurance , there are a few basic insurance plans that most small businesses can benefit from. For example, if your business will have employees, you will at least need to purchase workers’ compensation and unemployment insurance.

You may also need other types of coverage, depending on your location and industry, but most small businesses are advised to purchase general liability (GL) insurance, or a business owner’s policy. GL covers property damage, bodily injury, and personal injury to yourself or a third party.

If your business provides a service, you may also want professional liability insurance. It covers you if you do something wrong or neglect to do something you should have done while operating your business.

7. Build your team.

Unless you’re planning to be your only employee, you’ll need to recruit and hire a great team to get your company off the ground. Joe Zawadzki, general partner at AperiamVentures, said entrepreneurs need to give the “people” element of their businesses the same attention they give their products. 

“People build your product,” Zawadzki said. “ Identifying your founding team , understanding what gaps exist, and [determining] how and when you will address them should be top priority. Figuring out how the team will work together … is equally important. Defining roles and responsibilities, division of labor, how to give feedback, or how to work together when not everyone is in the same room will save you a lot of headaches down the line.”

8. Choose your vendors.

Running a business can be overwhelming, and you and your team probably aren’t going to be able to do it all on your own. That’s where third-party vendors come in. Companies in every industry, whether that’s HR or business phone systems , exist to partner with you and help you run your business better. For example, with a business phone system, you can design an IVR system to automatically route your callers to the right representatives.

When you’re searching for B2B partners, choose carefully. These companies will have access to your most vital and potentially sensitive business data, so finding someone you can trust is critical. In our guide to choosing business partners , our expert sources recommended asking potential vendors about their experience in your industry, their track record with existing clients, and what kind of growth they’ve helped other clients achieve. 

Not every business will need the same type of vendors, but there are common products and services that almost every business will need. Consider the following functions that are a necessity for any type of business.

• Enabling multiple customer payment types: Offering multiple payment options will ensure you can make a sale in whatever format is easiest for the target customer. Compare options to find the best credit card processing provider to ensure you’re getting the best rate for your business. That’s because small business credit card processing is often a direct route to more revenue and a larger customer base.
• Taking customer payments: Set up a point-of-sale (POS) system so that you have a state-of-the-art interface for making sales. The best POS systems couple this payment technology — which largely overlaps with credit card processing — with inventory management and customer management features. As such, POS systems are especially important if you plan to sell products instead of offering services.
• Managing finances: Many business owners manage their own accounting functions when starting their business, but as your business grows, you can save time by hiring an accountant , or by choosing the right accounting software provider .

9. Brand yourself and advertise.

Before you start selling your product or service, you need to build up your brand and get a following of people who are ready to jump when you open your literal or figurative doors for business.

• Company website: Take your reputation online and build a company website . Many customers turn to the internet to learn about a business, and a website is a digital proof that your small business exists. It is also a great way to interact with current and potential customers.
• Social media: Use social media to spread the word about your new business, perhaps as a promotional tool to offer coupons and discounts to followers once you launch. The best social media platforms to use will depend on your target audience.
• CRM: The best CRM platforms allow you to store customer data to improve how you market to them. A well-thought-out email marketing campaign can do wonders for reaching customers and communicating with your audience. To be successful, you will want to strategically build your email marketing contact list .
• Logo: Create a logo to help people easily identify your brand, and use it across all of your platforms.

Keep your digital assets up to date with relevant, interesting content about your business and industry. According to Ruthann Bowen, chief marketing officer at EastCamp Creative, too many startups have the wrong mindset about their websites. 

“The issue is they see their website as a cost, not an investment,” Bowen said. “In today’s digital age, that’s a huge mistake. The small business owners who understand how critical it is to have a great online presence will have a leg up on starting out strong.” 

Creating a marketing plan that goes beyond your launch is essential to building a clientele because it should continually get the word out about your business. This process is just as important as providing a quality product or service, especially in the beginning. 

Ask customers to opt into your marketing communications.

As you build your brand, ask your customers and potential customers for permission to communicate with them. The easiest way to do this is by using opt-in forms of consent. These forms allow you to contact them with further information about your business, according to Dan Edmonson, founder and CEO of Dronegenuity. 

“These types of forms usually pertain to email communication and are often used in e-commerce to request permission to send newsletters, marketing material, product sales, etc. to customers,” Edmonson said. “Folks get so many throwaway emails and other messages these days that, by getting them to opt in to your services transparently, you begin to build trust with your customers.” 

Opt-in forms are a great starting point for building trust and respect with potential customers. Even more importantly, these forms are required by law. The CAN-SPAM Act of 2003 sets requirements for commercial email by the Federal Trade Commission. This law doesn’t just apply to bulk email; it covers all commercial messages, which the law defines as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service.” Each email violating this law is subject to fines of more than $40,000.

Tip: Create a strategic marketing campaign that combines various marketing channels, like a company website, social media, email newsletters and opt-in forms.

10. Grow your business.

Your launch and first sales are only the beginning of your task as an entrepreneur. To make a profit and stay afloat, you always need to be growing your business. That takes time and effort, but you’ll get out of your business what you put into it. 

Collaborating with more established brands in your industry is a great way to achieve growth. Reach out to other companies and ask for some promotion in exchange for a free product sample or service. Partner with a charity organization, and volunteer some of your time or products to get your name out there. 

While these tips will help launch your business and get you set to grow, there’s never a perfect plan. You want to ensure you prepare thoroughly for starting a business, but things will almost certainly go awry. To run a successful business, you must adapt to changing situations. 

FAQs about starting a business

What are the four basics for starting a business.

The four basics for starting a business are your business name, business structure, business registration certificate and all your other licenses. You must take the proper legal and regulatory steps in each of these four areas before you launch your business. Obtaining external funding and putting together a business plan are also smart moves, but they aren’t legal prerequisites.

How can I start my own business with no money?

You can launch a successful business without any startup funds. Work on a business idea that builds on your skill set to offer something new and innovative to the market. While developing a new business, keep working in your current position to reduce the financial risk.

Once you’ve developed your business idea and are ready to start on a business plan, you’ll need to get creative with funding. You can raise money through investments by pitching your idea to financial backers. You could also gather funding through crowdsourcing platforms like Kickstarter, or set aside a certain amount of money from your weekly earnings to put toward a new business. Finally, you can seek loan options from banks and other financial institutions to get your company up and running.

Check out our list of low-cost business ideas for inspiration on how to start a new company when you’re on a tight budget.

What is the easiest business to start?

The easiest business to start is one that requires little to no financial investment upfront, and no extensive training to learn the business. A dropshipping company, for example, is one of the easiest types of new business to launch. Dropshipping requires no inventory management, which saves you the hassle of buying, storing and tracking stock. 

Instead, another company fulfills your customer orders at your behest. This company manages the inventory, packages goods, and ships out your business orders. To start, create an online store by selecting curated products from the catalog available through partners.

Check out our list of businesses you can start quickly for ideas on how to launch your next business with ease.

Which types of businesses can I start from home?

In today’s world of remote work, you may be thinking of an online business idea . Any online-only business that doesn’t require inventory should be easy to start from home. Ideas that fall within this category include but aren’t limited to copywriting businesses, online tutoring operations and dropshipping businesses. Anything you’re good at or passionate about that you can do from home, and for which demand exists, can make for a great home business. 

When is the best time to start a business?

Each person’s ideal timeline for starting a new business will be different. Start a business only when you have enough time to devote your attention to the launch. If you have a seasonal product or service, then you should start your business one quarter before your predicted busy time of the year. Spring and fall are popular times of year to launch for nonseasonal companies. Winter is the least popular launch season because many new owners prefer to have their LLC or corporation approved for a new fiscal year.

Max Freedman and Skye Schooley also contributed to this article. Source interviews were conducted for a previous version of this article.

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How to start and fund your own business

Learn from the Small Business Administration (SBA) how to start and fund a small business, from researching the market to launching your new business.

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The SBA can help you learn how to start your own business with 10 Steps to Start a Business .

The SBA's Business Guide covers other important aspects of running a business. These include:

• Paying business taxes
• Getting business insurance
• Applying for licenses and permits
• Hiring and managing employees

Business funding options

Learn from the SBA about sources for funding your business . They include:

• Self-funding

Funding resources for specific groups

The SBA also provides business guides and resources on funding and contracting programs for special groups, including:

• Women-owned businesses
• Minority-owned businesses
• Native American-owned businesses
• Veteran-owned businesses
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• LGBTQ-owned businesses
• Rural businesses

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How to Start a Small Business 

Starting a small business takes time, energy and money, so take steps that can help make it a success from the very beginning.

Start a Small Business 

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Starting a small business does not have to be a solo affair. Be sure to build a reliable team to help see your idea through.

Key Takeaways

• Be prepared to dedicate a lot of time to your business.
• Change your business concept according to feedback and the market.
• Develop a business budget that will take you from launch through at least the first year.
• Understand your funding needs and borrow prudently.
• Structure your business according to your company's needs.
• Hire the best people.
• Get ready for changes along the way.

Launching a small business is exciting. You'll finally stop working for others and can pursue your dream.

Though ownership tends to be stressful, time-consuming and risky, more Americans than ever are taking the entrepreneurial plunge. According to Inc. , 5.5 million new business applications were filed in 2023, the highest number on record.

While each venture is unique, there are some general steps every small business owner should take. Follow them and your path to success will be that much smoother.

Make Sure You Have the Time and Energy

If you're accustomed to a 9-to-5 schedule and having weekends for leisure, get ready for a big change.

Make sure you understand the time commitment, says Camile Sardina, founder and CEO of Evolist Media in New York City. “You'll be putting in even more work than you did as an employee,” she says. “It’s 24/7 for me. In the beginning you'll be doing it all yourself, too.”

That time commitment may not abate, either. A U.S. Chamber of Commerce report found that 50% of small business owners reported working more hours in 2022 than they did the previous year, with labor shortages exacerbating the problem.

When starting a business, Sardina suggests letting your friends and family know that you won’t be as available as you were before.

"I texted people and told them I’m trying to build something,” she says. "I explained that I’ll be limited in my conversations for a while, and will be slower to respond.”

Adjust Your Business Idea Before You Start

Even if you believe you’ve got the next billion-dollar idea, think carefully about whether the concept is truly a viable business.

“To really understand the market and the needs in the marketplace, you need to ask yourself a set of 'why’ and 'what’ questions,” says Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council, an advocacy, research and education organization. “Why are you launching the business? What is the problem you are going to serve in the marketplace?”

Run your concept past trusted people in your network and ask for honest feedback. Take their criticism into consideration. If possible, test out your idea, whether it's running a pop-up shop or offering a free service to a few potential clients to see whether the demand meets your expectations.

Adam Thatcher, founder and CEO of Grace Farms in New Canaan, Connecticut, says hearing feedback can be painful, but it's necessary.

"You'll have this vision of the grand idea of your masterwork, but you have to be realistic,” he says. "Listen to others who know the business better than you do.”

Create a Realistic Budget to Launch and Operate

Even if you don’t have a formal business plan yet, you will need to know how much money it takes to launch and operate.

“Figuring out the input costs and the selling price and all the components that make the economics work is super important,” says Tammy Halevy, executive director of Reimagine Main Street, a Los Angeles-based initiative focused on accelerating growth and opportunities for small businesses and their employees.

In the simplest terms, the steps to build a business budget include:

• Determining how much it will cost to get your business off the ground.
• Knowing how much capital you have on your own and the amount you'll need to get from other sources.
• If you take on loans, understanding the payment terms and making sure you can adhere to them.
• Conservatively estimating your monthly business revenue for at least the first year.
• Adding your fixed costs (such as rent, payroll and debt payments) to your variable costs (like marketing and materials) and subtracting the monthly total from your estimated monthly business revenue for the first year. 

Once you've run those numbers, you can adjust as needed. The more troubleshooting you do in the beginning, the better. Also, if you’re not planning on drawing a salary during the early years of the business, you’ll need personal savings or other funds set aside to pay for your living expenses until it gets off the ground.

Get Your Funding in Order

While there’s no one “right” way to fund a business, this decision will have implications later on the value of your business and its financial flexibility. The best source of capital for your company will depend on several factors, including your industry, your access to investors and your feelings about debt.

Be aware that securing business loans from a financial institution can be a challenge. A 2023 Goldman Sachs survey found that 77% of business owners said they were worried about how they would access credit.

To augment loans or even to replace them, you may turn to credit cards.

At first you may want to use the personal accounts you already have, but credit cards developed for small businesses are better. You can use them for all sorts of ventures, and they’re a good way to organize and track your business expenses. Most are equipped with accounting tools and a business-centric reward program.

Exercise prudence when charging, though.

"Never overextend yourself,” Thatcher says. "Everything adds up, from the gas in the tank to the dinners out with clients ." The business card may be in your company's name, but you will be personally responsible for the debt.

Decide on the Business Structure

How your business is structured affects everything from taxes to liability issues to funding opportunities. Here are the most common options:

• Sole proprietorship . This is the simplest business structure, and as a party of one you have total control over your venture. 
• Partnership . This is for when you have at least one other person going into the business with you and who is part owner of the company. 
• Limited liability compan y (LLC) . With this business structure your personal liability will be reduced, which can protect your assets against losses from lawsuits and bankruptcy. 
• C corporation (C corp) . This makes your business a separate legal entity and offers strong personal liability protection. 
• S corporation (S corp) . This is available only to small businesses with no more than 100 shareholders. It can have tax advantages over a C corp.

Before you decide on a business structure, consider getting advice from a professional first . Visit the website SCORE for free guidance.

Build Your Team

“ Hiring a great accountant can be the best use of your penny if you’re anything other than a sole proprietor,” says Venkat Krishnamurthy, president and co-founder of Alignable, a small-business networking platform. "You can do it yourself, but it’s not too much money and it will serve you well over the long haul.”

Eventually you may also need a lawyer to make sure all of your paperwork and business taxes are correct.

Take your time hiring staff, too, so you can ensure that they are right for your company. The first few hires can help set the culture and tone of your workforce.

“Adding an employee is a big step, because it will change the nature of how you spend your time,” says Greg Ott, CEO of small business credit marketplace Nav. "But it can also be the key to unlocking the growth of your company. It really is, for most businesses, the path to scaling and growing and getting more revenue.”

Market Your Product or Service

The best approach to building a small business will depend on your industry and your budget. Consider marketing tools that will generate the most bang for your buck, such as Facebook ads, and spread the word about your business on social media platforms.

In most cases you'll need a website. If you have the skills and time, you can create your own with platforms like Squarespace and Wix. A logo that you can have stamped on everything from T-shirts to mugs might be a great marketing tool, but if you don’t feel comfortable designing your own, gig workers on platforms like Fivrr are at the ready.

Pounding the pavement by interacting with people can be your best bet for word-of-mouth marketing, and doesn’t cost anything.

"Get out in the world and be super outgoing and gregarious,” Thatcher says. “Don’t be shy to tell everyone what you’re doing. You may be embarrassed at first, but get over it. Now everywhere I go I wear my branded hat. You never know who you'll meet.”

Prepare to Pivot

As you move along the process of starting your own business, you may become weary and frustrated. Things won't always go your way.

Rather than give up or stick with what's not working, be prepared to pivot. Successful entrepreneurs are elastic. For example, if açai bowls are trending down but fresh squeezed juices are trending up, find ways to tweak your business model to prevent falling sales.

“A lot of businesses ultimately end up being in a different place from their initial starting point,” says Luis Ramos, director of business advising at Accion Opportunity Fund, a nonprofit small business lender.

"That’s why I always stress the importance of getting out there and testing the product first and foremost. You may end up learning fairly quickly that what you think the market wants is not what it wants or needs,” he adds.

Grants for Your Small Business

Emily Sherman Jan. 24, 2024

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Written by Mary Kate Miller | July 22, 2022

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Want to start a business but not sure how? You’ve come to the right place. We’ll walk you through each of the necessary steps to starting a new business and provide links to more robust resources for each step whenever necessary. Because starting a business is scary enough, you don’t need the anxiety of wondering if you’re doing the right thing or trying to follow nebulous instructions.

Table of Contents

1. Perform Market Research

2. identify your target market, 3. write a business plan, 4. test your concept, 5. determine necessary funding (and secure it), 6. select your business location, 7. choose your business structure, 8. name your business, 9. register your business, 10. get your tax ids, 11. acquire necessary licensing and permits, 12. open a business bank account, 13. build your team and tech stack, 14. launch your business, 15. market your business, 16. continue to adapt until you find what works.

“Starting a Business” Checklist and FAQs

Let’s not waste any time.

Market research is the process of gathering information about your proposed market, potential audience, and customer base. Market research lays the foundation for any successful business, providing you with as much information and insight as possible when starting your new business.

For in-depth instructions on how to conduct market research, check out “The Complete Guide to Market Research: What It Is, Why You Need It, and How to Do It.”

The Goals of Market Research

• Understand current market conditions and identify your opportunities and challenges. What problem needs solving? What process or industry can be proved upon?
• Identify your target market and create foundational marketing materials, like buyer personas, to inform your marketing and customer acquisition efforts.
• Validate your initial concept.

Why You Should Do Market Research When Starting a Business

Market research should be one of the first steps to starting a business. It provides you with valuable information that will help you generate revenue quickly and avoid costly mistakes.

Types of Market Research

Primary research is much more fruitful for a new business than secondary research. Therefore, every entrepreneur should spend the time and energy performing their primary research to get a sense of what matters to a potential customer.

On the other hand, secondary data is much easier to track down (you can probably find a few valuable resources with a simple Google search). Because of this, many entrepreneurs choose to start here. Once you’ve gained a general overview of market conditions from your secondary research, you can pursue your primary research with a more nuanced perspective.

The types of market research:

• Market surveys
• Competitive analysis
• Social media analysis
• SEO research
• Market studies
• White papers
• Public data

Your target market is the specific group of customers that would be interested in your business’s products or services. It’s a subgroup within the total market for a product or service type. Defining your target market is essential for developing a successful marketing strategy.

For step-by-step instructions, consult “The Guide to Defining Your Target Market.”

Steps to identifying your target market:

• Analyze the total market conditions
• Look at what your competitors are doing (and not doing)
• Use the findings from your market research
• Pull information from social media

Creating a business will help your new business secure financing—whether from investors or a business loan—and stay focused on initiatives that will serve your strategy. Ultimately, a business plan works as a road map that will help your business succeed. For example, one study of more than 1,000 aspiring entrepreneurs found that those who had created a business plan were 16% more likely to achieve viability than those who didn’t.

Your business plan will outline:

• What your business does
• Who it serves
• How it makes money
• Its plans for growth

The Elements of a Business Plan

Business plans generally follow this format:

• Executive summary
• Business description
• Market analysis
• Products and services

You can find full details and a business plan template to help you complete each section in our guide, “How to Create a Business Plan (Step-by-Step Walk-Through With Examples).”

You can use the information you’ve cultivated in the first 3 steps to validate your business idea . One of the most nimble ways to approach this is to launch your business as a side hustle. Starting your new business as a side hustle will let you test the market, adjust your product offerings, and build an email list/social media following before taking the financial risk of becoming a full-time small business owner.

When restaurants open, they start with a soft opening. It gives the business time to work out the kinks—the kind you can only see once you’re up and running—before the grand opening. It also helps build buzz. Think of your side hustle the same way. It lets you validate and test your business so that when it’s time to launch, you cross the start line from a full sprint.

Every new business has startup costs . The amount of capital you’ll need varies depending on your industry, but your business plan should give you a solid sense of how much money you’ll need. If you haven’t already, do industry-specific research to determine your startup costs and how you’ll pay for your new business.

What You May Need Funding For

Typical startup costs include:

• Incorporation
• Licenses and registration fees
• Employees (payroll)
• Office space
• Retail space
• Business taxes

Ways to Finance Your Small Business

Securing financing for a business can take time, especially if you’re applying for a bank loan or SBA loan, so begin securing your funding now to ensure you maintain the cash flow you need for your new business.

The most common forms of small business funding include:

• Bootstrapping or self-funding: You can pay for your business yourself, which allows you the most autonomy. It helps you keep full ownership for yourself (or split with a business partner if you have one). The drawback of bootstrapping? Some new businesses cost more to launch than an entrepreneur has in savings.
• Friends and family: Many entrepreneurs turn to friends and family to help them close the gap and cover their startup expenses. The benefit of friends and family funding is that it can be quicker and easier to get than a loan or venture capital. The drawback is that it can get messy, especially if you don’t have a clear contract outlining what friends and family will get in exchange for their investment. (Pro tip: Always, always put this in writing. It doesn’t matter how close you are. It will get messy later if you don’t.)
• Small business loan: You can secure funding for a small business by applying for an SBA loan, a traditional small business loan, or through online lenders. This option allows you to maintain full ownership of your business, but it can come with a high cost of capital. For loans with an affordable cost of capital (like SBA loans), the process takes time and can be competitive.
• Grants: Grants provide the opportunity for “free money.” The downside is that they are competitive, and the applications can require a lot of time and energy.
• Venture capital: Depending on what type of business you’re starting and how scalable it is, you might be able to secure venture capital. The operative word there is might. Venture capital is highly competitive, and if you do secure funding this way, you will have to give up equity in your company. Plus, you’ll have a lot of pressure on your business performance from the very start.

Where will your business be? Do you need a physical space, or will your team be remote? Ask yourself these questions. If you’re starting a brick-and-mortar retail business, you’ll want to scout the location for your first shop. If you’re going to need office space, now is the time to find it.

Due to the increase in remote work , more and more coworking and incubator spaces are opening. Look for a space that you can grow into and has a supportive and collaborative community. There’s nothing better than a built-in network to help grow your small business.

Before starting your business, you want to determine what legal structure you want your new business entity to have. Here are your options :

• Sole proprietorship: A sole proprietor is someone who owns an unincorporated business on their own. This business model is best if you know you will remain a solo operation or keep your business as a side hustle.
• Limited Liability Company (LLC): An LLC is a hybrid model that allows you to form your business as a corporation or a limited liability partnership. With an LLC, business owners are protected from business liabilities similar to how they would be with a corporation.
• Corporation: Corporations are the most complicated business structure, but they also provide better tax rates (and protect business owners from liability). S-corps and C-corps are the most common corporation types for small businesses.
• Partnership: A general partnership is an arrangement where 2 or more individuals agree to share a business’s assets, profits, financial obligations, and legal liabilities.

It’s time to name your business. A good name should be easy to remember, generate interest, and allow for flexibility as your business grows and changes. You don’t want your business name to be too literal, box you in, or tell the whole story (it can’t).

The 4 Types of Brand Names to Choose From

There are 4 general business naming conventions:

• The general brand name
• The descriptive brand name
• The suggestive/associate brand name
• The coined, random, or abstract brand name

Want more help? Check out Coming up with a Business Name That Shines.

Your business structure and location will dictate whether you need to register your business. For many companies, you’ll just need to register your business name with state and local governments.

For others, you may need a federal license or to register with certain federal agencies. You can consult the SBA for more details.

You need to register with federal and state governments so that you can appropriately track and pay employment tax and business taxes.

You’ll need:

• A federal Employer Identification Number (EIN) A state Tax ID number

Depending on your business type or industry, you may need to secure business licenses or permits. Secure any necessary federal, state, or municipal licenses before you begin operating your small business.

Opening a business bank account will help you manage your cash flow and keep track of your business expenses and revenue. You want to keep your personal and business finances separate to prevent mistakes and to ease tax preparation.

Your small business team might just be a party of one for now, but you’ll need tools to lead you to success. Here’s a basic tech stack checklist to start a small business.

• Office tools (G-Suite, Microsoft Office)
• Sales or accounting software (QuickBooks, Minted)
• Website hosting service and platform (Squarespace, Wix, WordPress)
• Email marketing software (Mailchimp)
• Video conference software (Zoom)

If you’re building an agency , ecommerce , or SaaS small business, you’ll likely need to expand your tech stack as you grow.

Your team might include a cofounder or partner , but it also could be a team of freelancers . Here are team members (or freelancers) you should think about adding to your small business sooner rather than later.

• Social media marketing
• Website development
• Graphic design
• Advertising
• Copywriting

The key to starting your small business is to invest in what provides value for your future customers. Don’t spend your dollars on enterprise-level software or team of 10 freelancers until you’ve completed the steps on this list and proven your model.

Read more: Find a Business Partner Who’ll Help (Not Hurt) Your Business

Finally, the words you opened this guide hoping to read. You’ve taken all the necessary steps to start your business. It’s time to launch . Open your doors (metaphorically, if you’re launching an online business). Here are some basic launch steps to prepare you for success from the start:

• Claim your social platforms (even if they’re personal)
• Make sure your website is live and up to snuff (at minimum, make sure your customers can contact you)
• Reach out to your network announcing your launch date
• Build hype on social media before launching
• Have a digital (or physical) launch event

It’s time to welcome your customers and start generating revenue.

Marketing spreads the word about your small business. The way you approach marketing depends on your industry, audience, and budget. Here are the top marketing channels you should consider, according to “Small Business Marketing: The Ultimate Guide for Entrepreneurs.”

Marketing Assets Every Small Business Should Have

• Social media profiles
• Google Business profile
• Phone number

5 Strategic Ways to Market a New Business

• Email marketing
• Content marketing
• SMS (text) marketing
• Out-of-home (OOH) advertising

You won’t have all the answers when you start your business. You’ll make mistakes, and some of them will cost money. That’s all OK. Every entrepreneur makes mistakes. Viable businesses set themselves apart by adapting. Stay agile and flexible so that you’re ready to adjust once you see what works and what doesn’t.

The Complete “Starting a Business” Checklist

• Primary research (interviews, surveys, competitive analysis, social media/SEO research)
• Secondary research (market studies, white papers, public data)
• Identify your target market
• Test your concept
• Determine and secure funding
• Choose your business location (if necessary)
• Select a business structure
• Name your business
• Register/incorporate your business
• Federal Tax IDs
• State Tax IDs
• Obtain necessary licensing and permits
• Open a business bank account
• Get your tech stack
• Build your team

Small Business FAQs

What's the best type of small business to start.

The business that aligns with your why. Whether you're a developer or dog walker, starting a small business is hard. Without passion for what you do, your business is doomed to fail.

When is a good time to start a business?

If not yesterday, today. Many small businesses start as a side hustle. Check out our Start Your Side Hustle course when to know to quit your job and go all-in on your business.

Should I have a personal or business brand?

Both. You can't separate your business from your identity. Networking tools like LinkedIn make it crucial to build your personal brand alongside your business.

Should I hire a marketing agency?

There's a wide variety of marketing agencies out there, some good, some bad. Before your sign an expensive contract, make sure you identify where you need help. We suggest that you know the basics of Facebook Ads, social media marketing, and copywriting so you can be prepared to ask the right questions to know if an agency will get results or just schedule strategy meetings.

How do I know my product is good?

Good is a relative term. A better question to ask is whether your product solves a problem or fits a market.

Ready to Build Your Business?

No matter where you are on your entrepreneurial journey, we’re here to help. Explore our free training series to learn everything you need to make your business dream a reality.

About Mary Kate Miller

Mary Kate Miller writes about small business, real estate, and finance. In addition to writing for Foundr, her work has been published by The Washington Post, Teen Vogue, Bustle, and more. She lives in Chicago.

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A Way Forward for Small Businesses

• Alexander W. Bartik,
• Marianne Bertrand,
• Zoë B. Cullen,
• Edward L. Glaeser,
• Michael Luca,
• Christopher Stanton

In the face of existential uncertainty, you must balance urgency with prudence.

Small businesses with fewer than 500 employees account for 48% of American jobs and 43.5% of GDP, and they are facing an existential threat in the wake of the coronavirus crisis.  To understand the economic impacts on small business, the authors surveyed roughly 5,800 companies nationwide. They found these companies to be cash-strapped, with many having shut down or laid off workers, and uncertain about whether federal assistance will work for them. They offer five recommendations for small businesses navigating an uncertain future: 1) Don’t rush decisions, but do make plans; 2) Get in line for the Paycheck Protection Program now; 3) Understand how your customers’ needs have changed; 4) Do some realistic accounting; and 5) Keep your best employees loyal.

In these difficult times, we’ve made a number of our coronavirus articles free for all readers. To get all of HBR’s content delivered to your inbox, sign up for the Daily Alert newsletter.

It will be years before we fully understand the economic impact of the coronavirus, but one thing is painfully clear right now: Small businesses across the country are facing an existential threat. Businesses with fewer than 500 employees account for 48% of American jobs and 43.5% of GDP . Yet while these smaller firms are an essential part of the U.S. economy, they’re often financially fragile, with little cash on hand or resources to buffer even a minor financial shock. In the throes of the sweeping disruptions caused by the coronavirus, businesses around the country have closed temporarily. Many have ongoing expenses and little or no revenue and face the prospect that they may never reopen.

• Alexander W. Bartik is an assistant professor of economics at the University of Illinois at Urbana Champaign.
• Marianne Bertrand is the Chris P. Dialynas Distinguished Service Professor of Economics at the University of Chicago Booth School of Business, where she is the faculty director of the Rustandy Center for Social Sector Innovation.
• Zoë B. Cullen is an assistant professor of economics at Harvard University, in the Entrepreneurial Management Unit of Harvard Business School.
• Edward L. Glaeser is the Fred and Eleanor Glimp Professor of Economics at Harvard.
• Michael Luca is the Lee J. Styslinger III Associate Professor of Business Administration at Harvard Business School and a coauthor (with Max H. Bazerman) of The Power of Experiments: Decision Making in a Data-Driven World (forthcoming from MIT Press).
• CS Christopher Stanton is the Marvin Bower Associate Professor of Business Administration at Harvard Business School.

Partner Center

Generation Biz

They're uniquely positioned to succeed in today's digital-centric marketplace

Luke Lintz was at the gym in 2016 when his headphone wires got in the way of his bench press. It wasn't the first time it had happened, and the 16-year-old had had enough. At the time, wireless headphones were just emerging, and Lintz couldn't find many on the market in North America. He decided it was the perfect business opportunity. He found a product in China, compiled $10,000 of his and his older brother's savings, and together they purchased their first batch of wireless earbuds later that year — the same year Apple released the AirPods.

The only marketing they did was on Instagram. "We were basically a meme page to begin with, which brought in millions of views to our Instagram page," Lintz said. Instead of focusing their posts on the headphones, they posted memes and tacked on ads for the earbuds in the captions. Within the first six months, they sold all 500 units they had purchased. "It was the perfect example of right product, right timing," he said.

Shipping costs were covered by the customers, so Lintz had to pay only for camera equipment for filming promo videos and a small monthly warehousing fee. He was able to scale the business to more than $600,000 in revenue by 2018, when he graduated from high school. "I didn't have this huge grand vision of what it would turn into," Lintz told me. "It was more to fill my time with something productive."

Twenty years ago, Lintz's business would have been an impossible dream. Before social media, online access to Chinese products, and services like Shopify, setting up a similar business would have taken months of work and a lot of cash to get off the ground. Bernhard Schroeder, a lecturer for the Fowler College of Business at San Diego State University, remembers when running an e-commerce site required $50,000 to $100,000 worth of software. "Now you can rent Shopify as an e-commerce solution in the cloud for $50," he told me. "The access-to-technology barrier has come way down."

Other aspects of starting a company have also become easier. "It used to be that you had to meet someone face-to-face and they had to trust you," Schroeder said. "You couldn't find other entrepreneurs easily and network with them and ask, 'What did you do right? What did you do wrong?'"

Over the past couple of decades, the entrepreneurial landscape has changed dramatically. The ease of social-media marketing, cheap business software, and accessible data-analysis tools have significantly reduced infrastructure costs. Now the name of the game is branding . With a lower barrier to entry, entrepreneurs have become more diverse and more representative of the American population since 1996. And since 2020, the number of applications for new businesses has spiked dramatically. In an October Morning Consult survey , half of Gen Zers said they wanted to become an entrepreneur — and in this new environment, the generation is uniquely set up to succeed . All they need is an idea, a domain name, and a dream.

Before the internet, starting a business was a serious hassle. Access to market research, industry trends, and competitor analysis, for instance, was limited and often pricey. To get the word out, you had to advertise in the newspaper, get your product on the radio or TV, or send mail directly to prospective customers. It was difficult, if not impossible, to determine how successful any one marketing campaign was, and each route would set you back a pretty penny. Testing new ideas and products required physical inventory, costly infrastructure, and extensive marketing efforts. And data collection for most startups was a nascent concept.

Even just 15 years ago, the tracks for starting up a company hadn't been laid yet. All the mundane parts of business — bookkeeping , building a website, project management — were extremely time-consuming and inefficient.

"Entrepreneurship back then wasn't as sexy," Martin Warner, a veteran entrepreneur and the author of "The Startup Story: An Entrepreneur's Journey from Idea to Exit," told me. Warner cofounded his first company, botObjects, a 3D-printing-software and -hardware manufacturer, in 2013 before going on to found two other companies in 2015.

It used to be that your identity came second and the thing you were developing came first. But now, many say that they need to have an identity before they even start. Bernhard Schroeder, director of the Lavin Entrepreneurship Center Programs at San Diego State University

"For me at the beginning, it was much more about putting the mechanics together," Warner said. This included setting up an accounting system, nailing down a business model, and determining a talent-recruiting approach. Only then, he said, he could "focus on what was really important, and that was building a software product."

The annual startup rate — which measures the share of all businesses that register in a year and go on to launch and hire — took a major hit during the Great Recession, declining from 10% in 2006 to less than 8% in 2009, according to the US Census Bureau's Business Dynamics Statistics. The rate hovered around 8.5% in the 2010s. The problem wasn't that people weren't interested in starting a business: A 2016 EY study found that 62% of 18- to 34-year-olds had toyed with venturing into business ownership. But a significant hurdle stood in their way: 42% cited financial constraints as their main barrier. That shifted after the pandemic hit. The startup rate saw its greatest year-over-year jump in 2021, the most recent year we have data for, to 8.9%, and it's bound to increase as the surge in new business applications translates into fully launched companies. A 2023 analysis of microbusinesses — businesses that are too small or new to show up in government statistics — by GoDaddy found that 61% of entrepreneurs under 40 had started their businesses in 2020 or later.

In the past 10 years, an abundance of software tools has hit the market that helps budding entrepreneurs streamline the boring administration stuff, allowing them to focus their time, attention, and finances on the big picture. That has made starting a business all the more appealing — and affordable — for prospective entrepreneurs.

"In my era, entrepreneurship was like a 1 percenter," Schroeder, the San Diego State University professor, said. He started his first business in the 1990s. "Look at how many universities were teaching entrepreneurship courses in 1980 and how many universities are teaching entrepreneurship courses in 2024," he said. "The numbers are insane: It was less than 100; now it's almost 2,000." (A 2013 study found that the number of entrepreneurship courses ballooned from about 250 in 1985 to more than 5,000 in 2008.)

Amid the economic shake-up of the past several years, more people are taking the plunge and starting businesses and side hustles that turn into main hustles. (Nearly two in five US adults have a side hustle, a 2023 Bankrate survey found.) And with the plethora of digital tools we have today, starting a business is more accessible than ever.

One of the most significant changes to entrepreneurship is the new emphasis on branding. Despite its impressive revenue in 2018, Lintz's company overpurchased inventory and ended up $300,000 in debt the same year. To get out of it, he pivoted. He decided that he was better at building a brand than selling earbuds, so that fall, Lintz turned HighKey into a public-relations firm and slowly paid off the debt.

"Our original clientele grew from referrals," he said. According to Lintz, now 24, HighKey was one of the first companies to use mass direct-message outreach on social media as a strategy to close clients, which now include Nicki Minaj, Kevin Hart, and Khloé Kardashian. "We were able to make $20 million in revenue strictly through the Instagram DMs, doing no sales calls," Lintz said. (Business Insider confirmed that HighKey generated $20 million in revenue between 2020 and 2023).

The strategy worked because HighKey had already established a strong brand on Instagram. "The trust was there when we reached out to people. It was really just perfect," Lintz said.

Older entrepreneurs often don't understand how to use the tools available to get the organic traction they need to compete in today's business landscape.

The concept of personal branding was introduced by Tom Peters in a 1997 cover story for Fast Company. "To be in business today, our most important job is to be head marketer for the brand called You," Peters wrote. Today, whether you're a seasoned professional or just starting your career, personal branding is a strategic necessity .

Lintz has over 1 million followers on his personal Instagram account, where he posts highlight reels of his travels and inspirational posts about his business journey. Building a cohesive following as an entrepreneur is how you get sales opportunities and remind people you exist, he said. "If you don't have a personal brand out there," Lintz added, "it becomes that much harder to build that trustworthiness and credibility."

"It used to be that your identity came second and the thing you were developing came first," Schroeder of San Diego State University said. But now, many say that "they need to have an identity before they even start, and then maybe people will believe in my identity even though I haven't proposed anything yet," he added.

Nowhere is this concept clearer than in the rise of the $250 billion creator economy . With social-media platforms and content-creation tools, establishing a personal brand is a business. As soon as you start producing content that attracts a following, you can attract brand partnerships, sponsored content, and merchandise sales . Increasingly, entrepreneurs are turning themselves into the product.

One generation is uniquely set up to succeed. Since Gen Zers have grown up online, they're naturally more adept at navigating the new landscape. In a survey conducted by ZenBusiness in 2023, 78% of Gen Z respondents said being an entrepreneur was the most accessible job, and 69% said they learned about business through self-directed research and online videos. One in three Gen Zers said in a 2023 Instagram survey that the best way to get ahead financially was through "some form of self-employment."

Schroeder said he'd seen a lot of people in their late 30s and early 40s who wanted to start a company but struggled with the breakneck pace of technological innovation. "The good news is their experience," he said. "The not-so-good news is they're not digitally native." The older entrepreneurs he speaks with often don't understand how to use the tools available to get the organic traction they need to compete in today's business landscape. "It's a whole different ball game," he said.

If the trend continues, Gen Z's pursuit of entrepreneurship is poised to change the economic landscape. "The effect could be tremendous growth with new disruptor-type companies coming," Schroeder said. "I also think Gen Z, long term, they're going to be a kinder entrepreneur. I think they'll be better about what they build, better about what they don't waste, better about helping in their local community." He added: "It won't be money for money's sake."

Whether these bright-eyed and bushy-tailed entrepreneurs make it in the world of business remains to be seen: 30% of new businesses fail within two years, and half don't last past five years, according to the Small Business Administration . But thanks to the tools at our fingertips, more people can give their ideas a shot. "There's a ton more saturation," Warner said. "But the young kids won't see it that way."

Eve Upton-Clark  is a features writer covering culture and society.

Correction: March 29, 2024 — An earlier version of this story misstated Bernhard Schroeder's current title. He is a lecturer for the Fowler College of Business. He left his role as director of the Lavin Entrepreneurship Center Programs in 2022.

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Small businesses continue to face challenges beyond their control. In the past year alone, they’ve weathered increasing prices, high interest rates and stricter credit standards. Despite these obstacles, many entrepreneurs are moving forward with plans to get much-needed financing.

In fact, 67% of U.S. small-business owners plan to pursue funding for their business within the next 12 months, according to a new NerdWallet survey conducted online by The Harris Poll among 335 small-business owners.

Accessing financing during an ever-changing economic climate, however, can be difficult and expensive. While a loan can help fund the purchase of new equipment, stock shelves, hire employees and otherwise help a business survive or even thrive, it can also become a burden if payments become overwhelming.

Here are three tips to help small-business owners find and get the most affordable capital right now.

1. Leverage your existing financial relationships

Nearly half (45%) of small-business owners plan to pursue a traditional term loan in the next 12 months — and 18% are specifically looking for a bank loan, according to the survey.

Bank business loans tend to offer long repayment terms and low interest rates, but can be difficult to qualify for — especially since lenders have tightened their credit standards over the past year. Getting a bank loan isn’t impossible, however.

Some banks, especially local or community institutions, may be more flexible with their qualification requirements or offer other benefits, like interest rate discounts, if you already have a relationship. Consider starting your bank loan search with the institution that administers your business bank account or one that has issued you a loan in the past.

2. Strengthen your application profile

With or without an existing financial relationship, applying for a small-business loan can be intimidating: 17% of small-business owners are concerned about being rejected for the funding they need for their business in the next 12 months, according to the survey. To improve your chances of approval, you can:

Build your credit score

A strong credit score shows lenders that you repay your debts. In general, the stronger your credit history, the better loan rates and terms you’ll receive. To build your credit score , you can look for errors on your credit reports and dispute them with the appropriate credit bureau, make debt payments more frequently and pay down or pay off existing debt.

Offer collateral

Traditional lenders, like banks and credit unions, may require you to secure your loan with collateral . Offering additional collateral (e.g., equipment, inventory, real estate) — or providing it when it isn’t required — can help bolster your loan application, as it offsets the risk a lender faces when working with your business.

Double-check your paperwork

When you complete a loan application, it’s important to verify all requirements and read each question carefully. Providing incorrect or outdated information can significantly slow down the application process — and sometimes result in an automatic rejection.

If you’re applying for a loan online, for instance, and the lender uses automated underwriting technology, inputting inaccurate data can trigger a rejection regardless of the strength of your credentials. Before submitting your application, it can also be helpful to ask an employee, partner or business advisor to review it.

3. Seek expert advice

Although banks remain the most common source of credit for small businesses, there are many other funding options entrepreneurs can consider, including online loans, small-business grants , and equity financing. Twenty-one percent of small-business owners, however, say understanding all of the financing options available to them is a concern for their business in the next 12 months, according to the survey.

To help guide your funding search, it can be useful to work with a free or low-cost business advisor through an organization like SCORE or your local small-business development center. Experts from these organizations can help you organize your finances, compare funding options, and even prepare and submit loan applications.

Some lenders, like community financial development institutions (CDFIs) and nonprofit organizations, offer similar advisory services, in addition to their own loan options.

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet February 13-15, 2024, and February 20-22, 2024, among 335 U.S. adults ages 18 and older who own a small business. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 6.4 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact [email protected] .

NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.

On a similar note...

Small Business Trends

40 content marketing statistics every small business should know.

Content marketing is a powerful strategy for small businesses to connect with their audience, build brand awareness, and drive growth. In this article, we’ll explore 40 up-to-date content marketing statistics that highlight its impact and significance. Whether you’re a seasoned marketer or just starting out, these stats will provide valuable insights to enhance your content strategy.

Understanding Content Marketing

Content marketing is a strategic strategy that involves creating and sharing valuable, relevant, and consistent content to attract and retain a specific audience. It’s an inbound strategy, focusing on engaging and educating the audience through digital assets like text, images, and videos rather than direct promotional messages.

What is Content Creation?

Content creation is crucial for businesses to attract and engage audiences, build authority and trust, drive traffic and SEO, fuel social media and email campaigns, and support sales and conversions. By consistently producing high-quality content, businesses can attract potential customers, build authority, drive organic traffic, engage subscribers, and guide potential customers through their buying journey, ultimately fostering brand loyalty and success.

The Evolution of the Content Marketing Industry

Content marketing has come a long way, adapting to changing consumer behavior, technological advancements, and market dynamics. Here are some key milestones in its evolution:

• Content marketing existed even before the internet. Brands published newsletters, brochures, and magazines to educate and engage their audience.
• John Deere’s “The Furrow” magazine (first published in 1895) is a classic example of early content marketing.
• The rise of the internet transformed content marketing. Websites, blogs, and email newsletters became popular channels.
• Brands started creating online content to attract and retain customers.
• Social media platforms emerged, providing new avenues for content distribution.
• Brands leveraged platforms like Facebook, Twitter, and YouTube to engage with their audience directly.
• The proliferation of content formats expanded options for marketers. Video, podcasts, webinars, and interactive content gained prominence.
• User-generated content (UGC) and influencer marketing became essential.
• Personalized content experiences using data-driven insights became crucial.
• Artificial intelligence (AI) now assists in content creation, distribution, and optimization.

Why Small Businesses Should Invest in Content Marketing

Content marketing is a crucial strategy for small businesses due to its cost-effective reach, building brand awareness, establishing authority and trust, driving organic traffic, nurturing customer relationships, supporting other marketing efforts, driving conversions and sales, being adaptable and diverse, offering various formats like blog posts, infographics, podcasts, and videos, and providing measurable results through metrics like website traffic, engagement, and conversion rates. It also helps small businesses maintain a consistent brand experience by responding to comments, addressing customer pain points, and providing solutions. Content marketing also supports other marketing efforts, such as social media campaigns, email newsletters, and paid advertising, creating a cohesive brand experience. It also drives conversions and sales by guiding potential customers through their buying journey. Unlike paid ads, content remains accessible over time, providing ongoing value. Overall, content marketing is a cost-effective and effective way for small businesses to reach a wide audience and build a strong brand presence.

Diving into Content Marketing Stats

• There are over 600 million blogs online .
• Blogging has grown 12% since 2015.
• Over 6 million new posts are published every day
• WordPress is home to approximately 60 million blogs, and 43% of websites on the Internet are powered by WordPress
• 70% of consumers would rather read a blog post than view an ad
• 30% of readers prefer to read and share blog posts that have numbers in the title

Content Marketing Strategy Statistics

• 82% of marketers are actively investing in content marketing, 10% report not using content marketing, and 8% are unsure if their company uses content marketing.
• 69% of marketers actively invest time in SEO.
• 76% of marketers report that content marketing generates demand/leads (a 9 percentage points increase since last year). In addition, 63% of marketers say that content marketing helps to nurture the audience/customers/leads, and 50% say that it helps build loyalty with existing clients/customers (a 13 percentage points decrease).
• 40% of B2B marketers have a documented content marketing strategy. That percentage is higher among the most successful B2B marketers — 64% have a documented content marketing strategy .

Content Marketing Budget Statistics

• Almost 50% of professionals involved in content marketing expected their content budgets to increase over the next year, 26% expected them to stay the same, and 19% expected them to decrease.
• Content marketing revenue amounted to 63 billion U.S. dollars in 2022.
• The content market industry is set to reach 107 billion U.S. dollars by 2026 .

Successful Content Marketing Campaigns Statistics

• 82% of marketers are actively investing in content marketing.
• 40% of B2B marketers have a documented content marketing strategy. That percentage is higher among the most successful B2B marketers — 64% have a documented content marketing strategy.
• 76% of marketers report that content marketing generates demand/leads (a 9 percentage points increase since last year).
• Video was the primary form of content being created in 2023 (50%), followed by images (47%), and blogs (33%).
• Almost 80% of respondents had already adopted AI tools in their content marketing strategies.

Long Form Content Statistics

• Long-form content attracts an average of 77.2% more links than shorter articles.
• Articles with a word count of over 2,500 earn the most links.
• Long reads of 3000+ words get 3 times more traffic than articles of average length (901-1200 words).
• : Long-form articles generate 2 times the engagement of short articles on mobile devices.
• The average blog post is 1236 words long.

Content Marketing ROI Statistics

• 54% of marketing professionals stated their organizations measured the return on investment of content marketing activities.
• 20% of marketers stated that they spent between three and five thousand U.S. dollars on content marketing every month in 2022.
• Content marketing generates over 3x as many leads as outbound marketing and costs 62% less.
• On average there is a content marketing ROI of 2.77 dollars for every dollar spent.

Statistics on Content Marketing Impact

• 51% of the businesses that invest in content marketing publish content every day.
• 73% of respondents prefer to learn about a product or service from a short video. 11% prefer to read a text-based article, website, or post. 4% prefer to view an infographic. 3% prefer to download an ebook or manual. 3% prefer to attend a webinar or pitch. 3% prefer to receive a sales call or demo.

Statistics on Content Marketing Trends

• Online videos have an audience reach of around 92.3% among internet users worldwide.
• 91% of people say they want to see more video content from brands.
• Video accounts for 82.5% of global internet traffic.
• 91% of marketers use video as a marketing tool.
• 66% of consumers report short-form videos as the most engaging content .
• 89% of people say watching a video has convinced them to buy a product or service.
• The average user spends 88% more time on websites that have videos.
• 85% of internet users in the United States watch online video content.
• YouTube is the most widely used video marketing platform, with 90% of video marketers trusting it.
•  Only 36% of marketers have published ‘live’ video content, such as live streams on social media channels.

Content Marketing Strategies

Content marketing is a crucial aspect of many businesses’ marketing strategies, with 82% of marketers actively investing in it. 40% of B2B marketers have a documented strategy, with 64% having a successful one. SEO is a crucial aspect of content marketing, with 69% actively investing in it. 76% of marketers report content marketing generates demand, and almost 80% have adopted AI tools.

The Role of Content Marketers

A content marketer is a professional who plans, researches, creates, distributes, and analyzes content to attract and engage potential customers. They typically create blog posts, how-to guides, videos, infographics, white papers, and more. Depending on their experience, content marketers may also be expected to conduct market research and analyze content performance.

Here are some common roles within the content marketing industry:

• Content Strategist: Content strategists have a clear overview and understanding of a brand’s goals, messaging, and values. They develop a content strategy that is aligned with the overarching business objectives and oversee its implementation.
• Content Creator: Content creators are responsible for producing a huge range of content types, from social media posts, video scripts, and long-form articles to guides, emails, downloadable content, and more. Their day-to-day work involves researching and writing engaging, accurate, and valuable content for specific audiences.

The Art of Creating Content

Creating content within the context of a content marketing strategy involves several key steps:

• Understanding Your Audience: The first step in creating content is understanding who your audience is. This involves creating buyer personas, understanding their needs, and identifying the type of content they consume.
• Setting Clear Goals: Your content should have clear goals. Whether it’s to drive traffic, generate leads, or increase brand awareness, having clear goals will guide your content creation process.
• Brainstorming Content Ideas: Once you understand your audience and have clear goals, the next step is brainstorming content ideas. This can involve keyword research, competitor analysis, and using tools like Google Trends.
• Creating the Content: The next step is creating the content. This involves writing the content, creating graphics, recording videos, etc. The content should be high-quality, engaging, and valuable to your audience.
• Promoting the Content: Once the content is created, the next step is promoting it. This can involve sharing it on social media, sending it to your email list, or using SEO to drive organic traffic.
• Analyzing the Results: The final step is analyzing the results. This involves using analytics tools to measure the performance of your content and see if it’s achieving its goals.

What The Latest Content Marketing Statistics Mean for Your Business

The latest content marketing statistics have several implications for your small business:

• Investment in Content Marketing: With 82% of marketers actively investing in content marketing, it’s clear that content marketing is no longer optional. It’s a crucial part of any marketing strategy.
• Documented Content Marketing Strategy: The fact that 64% of the most successful B2B marketers have a documented content marketing strategy highlights the importance of strategic planning in content marketing. If you don’t have a content marketing strategy yet, now is the time to create one.
• Content Marketing for Lead Generation: Content marketing generates over 3x as many leads as outbound marketing and costs 62% less. This means that investing in content marketing can help you generate more leads while saving money.
• Use of AI Tools in Content Marketing: The widespread adoption of AI tools in content marketing points to the growing role of technology in optimizing content creation and distribution. If you’re not already using AI tools in your content marketing, it might be worth exploring.
• Long-Form Content: Long-form content attracts an average of 77.2% more links than shorter articles. This suggests that creating long-form content can help you attract more links and generate more traffic.

FAQs: Content Marketing Statistics

How effective is content marketing.

Content marketing is highly effective, with 76% of marketers reporting that it generates demand and leads. It’s a cost-effective strategy that drives organic traffic, nurtures customer relationships, and supports other marketing efforts.

Is content marketing in high demand?

Yes, content marketing is in high demand, with 82% of marketers actively investing in it. It’s a crucial aspect of many businesses’ marketing strategies due to its effectiveness in generating leads and building brand awareness.

How big is the content marketing market?

The content marketing market revenue amounted to 63 billion U.S. dollars in 2022 and is projected to reach 107 billion U.S. dollars by 2026, indicating significant growth and opportunities in the industry.

What is the most important content marketing statistic for small businesses?

For small businesses, the most important content marketing statistic is that it generates over 3 times as many leads as outbound marketing and costs 62% less. This highlights its effectiveness and cost-efficiency in lead generation.

How do content marketing statistics influence marketing strategies?

Content marketing statistics provide valuable insights that help businesses make content marketing work . For instance, the widespread adoption of AI tools in content marketing indicates the importance of leveraging technology for optimization. Additionally, the preference for long-form content underscores the significance of creating comprehensive, engaging content.

What content marketing statistic is most surprising and why?

The statistic that long-form content attracts an average of 77.2% more links than shorter articles is surprising because it emphasizes the impact of content depth and quality on link generation. It underscores the importance of investing in comprehensive, in-depth content to enhance online visibility and authority.

How can a small business use content marketing statistics to improve their marketing?

Small businesses can use content marketing statistics to inform their strategy and decision-making processes. For example, they can allocate resources toward creating long-form content to maximize link generation and organic traffic or even learn ways to improve writing and SEO . Additionally, they can leverage AI tools to optimize content creation and distribution, thereby enhancing efficiency and effectiveness.

What strategies do successful content marketers commonly use?

Successful content marketers commonly employ strategies such as having a documented content marketing strategy (adopted by 40% of B2B marketers), investing in SEO (69% of marketers), and utilizing AI tools in content marketing (almost 80% adoption rate). You can also step up your marketing strategy and make your content marketing more productive by creating targeted, high-quality content that resonates with your audience and drives results.

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California fast-food workers will get $20 minimum wage, starting Monday

Vanessa Romo

Alina Selyukh

A McDonald's worker hands food to a customer at a drive-thru window in Los Angeles, on Sept. 28. Damian Dovarganes/AP hide caption

A McDonald's worker hands food to a customer at a drive-thru window in Los Angeles, on Sept. 28.

California fast-food workers cooking Big Macs or whipping Frappuccinos will start making a minimum wage of $20 an hour on Monday. For many, this means a 25% raise.

The new state minimum uniquely focuses on a particular segment, fast food, affecting some of the country's biggest chains, including McDonald's, Starbucks, Subway and Pizza Hut.

It's a big win for cooks, cashiers and other fast-food workers – some of the lowest-paid jobs in the U.S. – whose wages have been growing at a faster clip since the pandemic, after decades of stagnation.

California is one of the country's most expensive states; about half a million people are estimated to work in fast food here, mostly women, immigrants and people of color. Many live below the poverty line.

Uber and Lyft threaten to halt operations in Minneapolis over minimum wage law

Sandra Jauregui from Sacramento is counting down the days to her first bigger paycheck in two weeks. After 18 years working at several Jack in the Box franchises, her pay will jump from $17.50 to $20. That means she could be bringing home another $120 each paycheck.

"It's super great," says Jauregui, 52, speaking in Spanish. "At the very least it'll give me some breathing room ... and make it easier to pay the rent and other bills."

Chipotle, McDonald's warn of price hikes, less work

But the dramatic pay raise has also touched off a heated debate about the impact on local businesses. Smaller franchise restaurant owners warn they'll have to raise prices, reduce worker's hours, cut jobs or even close shop.

California's pay hike is a result of a contentious deal struck by labor leaders, including the large Service Employees International Union, and fast-food companies last year. The new wage law applies to fast-food chains with at least 60 locations nationwide, with exemptions for some bakeries and smaller fast-food outposts inside grocery stores, airports and other venues.

Several fast-food executives have suggested prices would go up 2.5% to 3.5% to offset higher wages; Jack in the Box, Starbucks, McDonald's and Chipotle have all warned of upcoming price hikes. That's on top of price increases many restaurants have been rolling out for months. The cost of eating out has stubbornly inched higher even as inflation has cooled elsewhere .

Other chains plan to speed up their use of automation, including kiosks and robots. A major Pizza Hut franchisee cited the wage hike as the reason for layoffs of more than 1,000 delivery drivers this year, in a switch to apps like Uber Eats and DoorDash that pushes more delivery fees onto shoppers.

One big Pizza Hut franchisee in California cited the upcoming wage hike as a reason for laying off more than 1,000 delivery drivers in a shift to delivery apps like Uber Eats and DoorDash. Justin Sullivan/Getty Images hide caption

One big Pizza Hut franchisee in California cited the upcoming wage hike as a reason for laying off more than 1,000 delivery drivers in a shift to delivery apps like Uber Eats and DoorDash.

Franchisees weigh cuts to workers' hours

Many restaurant owners expect workers to be working fewer hours. That was the main side-effect a decade ago, when Seattle hiked its minimum wage to $15, research suggests .

"I am used to being a champion of labor and I'm in this odd position," says Michaela Mendelsohn, a longtime advocate for LGBT workers and also owner of six El Pollo Loco restaurants with about 170 employees.

Her restaurants lost shoppers after a pre-emptive price increase in February, she says. Now, the focus is on cutting costs by simplifying operations, changing how long it takes workers to make sauces, for example, or to close up for the night.

Minimum-wage workers in 22 states will be getting raises on Jan. 1

"We're having to get more efficient," Mendelsohn says. "So really what's left is ... to reduce labor hours. And I hate saying that."

In recent years, the battle for higher minimum wages has increasingly played out at the city, county and state levels as the federal minimum wallows at $7.25 an hour .

Broadly, California often sets the bar for many business decisions that other states later follow. Advocates hope something similar will happen with fast-food pay – spreading to other industries in the state and across the country.

California's minimum previously rose to $16 an hour on Jan. 1.

Workers are thrilled, but also anxious

Employers' warnings have left many workers with mixed feelings about the raise, despite the potential for extra spending power.

The Jack in the Box worker Jauregui, 52, has been cobbling together two salaries, working about 54 hours a week between the restaurant and a laundromat.

She says she's always trying to save a bit to treat her grandchildren – she has custody of three of them – who are constantly growing out of clothes and shoes. And although she marched alongside fellow SEIU members to win the wage increase, she is fearful of the downside.

These millionaires want to tax the rich, and they're lobbying working-class voters

"My boss told me that he won't reduce my hours but that he will cut others' hours," Jauregui said.

All this makes California's wage hike a high-profile case study for how exactly a higher minimum wage reverberates through the local economy.

"This policy is going to be really different in different parts of California," says Jacob Vigdor, professor of public policy and governance at the University of Washington, who has studied the effects of Seattle's 2014 minimum wage hike.

The research found that after the minimum wage rose from $9.47 to $13 – in the early years of the Fight For $15 labor campaign – workers generally didn't lose jobs even though they did lose hours. And they ended up with higher pay.

"The restaurant business is a really tough business," Vigdor says. "Restaurants open and close all the time, even in places where the minimum wage hasn't changed for more than a decade. ... Generally speaking, we found that in the restaurant industry, businesses were able to find ways to adapt to higher wage costs."

KQED's Farida Jhabvala Romero contributed to this report.

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Inside a C.E.O.’s Bold Claims About Her Hot Fintech Start-Up

Amira Yahyaoui, a human rights activist, promoted the success of her student aid start-up, Mos. Some of her statements do not add up, according to internal data and people familiar with the company.

By Erin Griffith

Reporting from San Francisco

As a Tunisian human rights activist in the 2000s, Amira Yahyaoui staged protests and blogged about government corruption. In interviews , she described being beaten by the police. When she was 18, she said , she was kidnapped from the street, dropped off at the Algerian border and placed in exile for several years.

Ms. Yahyaoui’s compelling background helped her stand out among entrepreneurs when she moved in 2018 to San Francisco, where she founded a student aid start-up called Mos. The app hit the top of Apple’s App Store, and Ms. Yahyaoui raised $56 million from high-profile investors, including Sequoia Capital, John Doerr and Steph Curry, according to PitchBook, which tracks start-ups. Mos was valued at $400 million.

In podcasts, TV interviews and other media, Ms. Yahyaoui, 39, frequently discussed Mos’s success.

Among other things, she said the start-up had helped 400,000 students get financial aid. But internal company data viewed by The New York Times showed that as of early last year, only about 30,000 customers had paid for Mos’s student aid services. The rest of the 400,000 users included anyone who had signed up for a free account and may have gotten an email about applying for student aid, two people familiar with the situation said.

After Mos expanded into online banking in September 2021, Ms. Yahyaoui told publications such as TechCrunch that the company had more than 100,000 bank accounts. But those accounts had very small amounts of money in them, according to the internal data. Less than 10 percent of Mos’s roughly 153,000 bank users had put their own money into their accounts, the data showed.

Some employees tried to speak up about Ms. Yahyaoui’s claims, said Emi Tabb, who worked at Mos in operations and had roles such as head of financial aid before resigning in late 2022. But Ms. Yahyaoui dismissed and sometimes disparaged employees who tried pushing back against her public comments, five people who witnessed the incidents said.

“She created a culture of fear,” Mx. Tabb said.

Mos is among a class of tech start-ups that rose during the fast money era of the late 2010s and early in the pandemic, when young companies landed millions of dollars in funding with little more than promises. Now as the money has dried up and many tech start-ups grapple with a downturn , investors are pickier, customers are warier of bold claims and employees are more suspicious of founder pronouncements.

Last year, Mos laid off approximately half its staff of around 50 and shut down its banking service. The company reverted to its original business of helping students find financial aid and began emphasizing its use of artificial intelligence.

Ms. Yahyaoui referred questions to a Mos spokeswoman, who declined to comment. When Ms. Yahyaoui was asked last year about Mos’s number of users, she posted on social media that female founders were often presumed guilty while male founders were presumed innocent.

“Maybe today we should start applying presumption of innocence to also female founders,” she wrote.

This account of Mos was based on interviews with eight current and former employees, as well as internal communications, presentations and analytics. The internal documents go up to 2023.

Ms. Yahyaoui grew up in Tunisia and then lived in exile in France. After moving to San Francisco, she raised money for Mos from investors including Expa, the investment firm started by Garrett Camp, a founder of Uber. Mos provided a service to help students find sources of financial aid, charging $149 for each school year.

Deena Shakir, an investor at Lux Capital, which backed Mos in 2020, said she and the firm’s partners “deeply respect” Ms. Yahyaoui.

“We take pride in supporting companies and founders like Amira whose commitment to enabling access for students gives us hope for the future of higher education,” Ms. Shakir said.

Mos had a slow start, three people with knowledge of the company said. Some students who signed up learned about aid they already knew about, like a Cal Grant for California residents, they said.

An investor presentation viewed by The Times showed that Mos had monthly revenue of $340,000 in December 2019. The start-up allowed users to pay $1 upfront and the remaining $148 when they got their financial aid.

Mos ultimately did not collect most of that money. Seventy percent of users defaulted on their payments after the pandemic hit in 2020, Jess Lee, an investor at Sequoia who sits on Mos’s board, later said in an article about the company published on Sequoia’s website.

As of late 2022, roughly 6,500 of Mos’s paying customers, or 22 percent, got refunds for its financial aid service, according to internal data. The company had told customers that if they didn’t get five times the cost of Mos’s services in financial aid, they could get a refund.

Mos said it could help students access $160 billion in scholarships, but that amount included loans, three people familiar with the situation said. The company’s pitch was to help students avoid debt.

Ms. Yahyaoui also said students who used Mos “saved” an average of $16,000. That was the amount that the start-up determined they qualified for and not what the students received in aid, three people with knowledge of the company said.

Mos’s website includes a moving ticker of happy customers (“Jasmine got $12,237 for Cal Poly,” for example). Ms. Yahyaoui asked employees to use stock photos and to make up names, three people with knowledge of the company said.

By 2021, financial technology was hot with investors. Ms. Yahyaoui pushed Mos to become a bank, making its financial aid product free. That September, the start-up announced its move into banking with a promotion that gave people $5 to sign up and another $5 for every referral.

Sign-ups poured in. Mos turned off the $5 promotion on its first day. Two months later, it turned it back on for three days and signed up more than 100,000 accounts, spending around $1 million in the promotion and sending Mos to the top of the App Store.

The sign-ups piqued investor interest, including from the investment firm Tiger Global. Sequoia’s Ms. Lee wanted to see how many of the accounts that signed up during the promotion remained active before investing more, two people familiar with the situation said. Sequoia encouraged Ms. Yahyaoui to hire an outside firm to assess whether the accounts belonged to real people, the people said.

Some employees also had concerns that many accounts did not belong to real people, three people familiar with the situation said. As sign-ups continued, Mos analyzed the accounts for potentially fraudulent behavior in an internal working document. In November, Ms. Yahyaoui restricted Ms. Lee’s access to that document, two of the people said.

Soon after, in February 2022, Tiger Global announced it led a $40 million funding for Mos. Sequoia joined the deal. It is not clear what impact access to the document would have had on Sequoia’s decision to invest more in Mos. Two people familiar with the situation said Ms. Lee retained access to a broader data source regarding the accounts.

In a statement, Ms. Lee said: “The most successful founders are the ones who have grit and are willing to test new hypotheses and adapt. Amira is the embodiment of these qualities.”

Tiger Global declined to comment.

Alongside the funding announcement, Sequoia published an article on its website detailing Ms. Yahyaoui’s dramatic past and entrepreneurial vision. It said fewer than 1 percent of Mos’s bank accounts had been closed, “an unheard-of statistic for a money-based sign-up promotion.”

Few people used the bank accounts, according to internal data viewed by The Times. Of roughly 153,000 open accounts, 95 percent had less than $5 in them and a third had a balance of zero through 2022, the data showed. Just 9.5 percent of account holders deposited money into their accounts during that time.

Mos told its board that 74 percent of bank account holders were students, according to a presentation viewed by The Times. But only around 20 percent were 22 or younger, according to internal data, with about 45 percent over the age of 30. Mos’s revenue from transaction fees, which made up the vast majority of the company’s total income after it became a bank, was less than $70,000 for the first nine months of 2022, two people familiar with the finances said.

Ms. Yahyaoui sometimes berated her top managers and threatened to fire them if their performance didn’t improve, according to five people who witnessed such events.

Using expletives, she wrote in a January 2022 message to employees that the company’s mission was meaningless “because of how bad we are at getting” stuff done.

“I need people I can count on to beat my dreams not to lower them,” she wrote.

Ms. Yahyaoui’s treatment of employees — including workers hired in Tunisia and Algeria — ran counter to her image as an activist, Mx. Tabb said.

At an employee gathering in September 2022, a Mos employee asked Sequoia’s Ms. Lee about her biggest concern for the start-up, three people who attended said. Ms. Lee initially said she was surprised by how good morale was given the circumstances, then added that it wasn’t clear what Mos’s product would be.

The start-up was at more of a “seed stage,” or very early in its development, Ms. Lee said.

Erin Griffith covers tech companies, start-ups and the culture of Silicon Valley from San Francisco. More about Erin Griffith

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