How To Start a Business (Step-by-Step Guide for Beginners) 

Key takeaways: 

• Choose a business idea that solves a real problem, fits your skills, and has room to grow. 
• Register your business, secure the right licenses, and keep finances separate to build a solid foundation. 
• Market your business consistently online and offline to attract customers and stay adaptable as trends change. 

Starting a business begins with one idea but thousands of questions. Do I have enough money? What paperwork is required? Will customers come? These doubts are common, but you’re not the only one facing them.  

In 2024, more than 5 million new business applications were filed in the U.S. This shows how many people are willing to take the first step despite the uncertainty. 

But how do you start a business? Let’s walk through a detailed process to learn how to shape your idea, choose the right structure, secure permits and funding, and set up your brand for success. 

How to start a business: Step-by-step process 

If you’re feeling stuck on where to begin, let’s take one step at a time. Below are the steps to help you get started: 

1. Develop your business idea 
2. Research your market 
3. Choose a business name 
4. Choose a business structure 
5. Complete legal registrations and licensing 
6. Secure funding and plan finances 
7. Protect your business 
8. Create a professional business website 
9. Market your business 
10. Grow and adapt your business 

Step 1. Develop your business idea 

Every business starts with an idea, but the right idea is relevant, practical, and scalable. Here are things you must consider for a business idea: 

• Follow your passion but confirm demand. Enjoying what you do helps you stay motivated, but you also need to know there is a real market for it. 
• Look for a problem that needs solving. Great businesses often begin with simple frustrations. If people struggle with something and you can provide a direct solution, it may give you the signal to start that business. 
• Build on your strengths. Think about what you already know or do well. Using your skills and experience gives you an advantage when starting out. 
• Check if people are looking for it. Use tools like Google Trends, keyword searches, or small customer surveys to see if people are actively searching for what you plan to offer. 
• Test on a small scale first. Sell a simple version of your product or service, run a pilot, or collect preorders to see if there is real interest before you spend heavily. 
• Think about long-term growth. A hobby might bring in side income but ask yourself if it can develop into a sustainable business. 
• Understand costs and profitability. Some ideas need little investment, while others require more resources. Make sure the business model works for your budget. 
• Fit it to your lifestyle. Decide if you want something local, remote, part-time, or designed for fast growth. The type of business you choose should support the lifestyle you want. 
• Study your competition. If others are already offering something similar, look at what they do well and where they miss. This shows you how to stand out. 
• Stay open to adjustments. The first version of your idea may not be perfect. Be ready to refine it as you gather feedback and learn more about the market. 

Examples of business ideas to start with 

If you still don’t know what type of business idea to choose, here are a few common ways people begin: 

• Service-based businesses (low cost, quick to launch): tutoring, dog walking, home cleaning, bookkeeping, consulting 
• Product-based businesses (more planning and investment): handmade crafts, packaged foods with proper permits, niche ecommerce stores 
• Digital businesses (low overhead, flexible): blogging, online courses, affiliate marketing, dropshipping 
• Local brick-and-mortar (higher setup costs, long-term growth): cafés, salons, small retail shops, fitness studios 

If you want businesses that don’t need a big investment, you can explore our list of low-cost business ideas. 

Step 2. Research your market 

Before you commit money or time, you need to know who your customers are, what they want, and how your business can stand out.  

Market research gives you that clarity and helps you avoid building something no one is asking for. 

Here’s how you can research your market: 

• Define your target audience. Identify who your customers are, what problems they face, and what motivates their decisions.
• Study buying behavior. Look at how they currently solve the problem, how much they’re willing to pay, and what influences their choices. 
• Analyze competitors. Review their products, pricing, and customer feedback. Pay attention to recurring complaints or gaps you could address. 
• Use free tools. Google Trends, keyword research, and short surveys or interviews can help you spot demand patterns and validate your idea.  

Once you’ve gathered information, use a SWOT analysis. A SWOT analysis is a framework that stands for strengths, weaknesses, opportunities, and threats. Let’s break down each: 

• Strengths. These are the things that give your business an advantage. It could be your skills, unique experience, lower costs, or even a location that makes you more accessible to customers. 
• Weaknesses. These are the areas that hold your business back. Limited funding, lack of experience, or not having a strong network can make it harder to compete or grow. 
• Opportunities. These are external factors you can use to your benefit. Look for gaps in the market, customer frustrations with existing options, or rising trends that make your idea more appealing. 
• Threats. These are outside risks that could hurt your business. Strong competitors, changing regulations, or shifts in customer behavior are all things to watch out for. 

If you’re looking to better understand customer insights and market opportunities, our guide on market research strategies will help you break them down step by step. 

Step 3. Choose a business name 

A business idea starts to feel real once it has a name. It’s the word people will say when they recommend you, the label on your receipts and contracts, and the identity that grows with you from first sale to future growth. 

Here are a few things to consider when deciding on the right name: 

• Choose a name that fit 
• Check availability 
• Think long term 

Choose a name that fits 

When choosing a business name, aim for something simple, clear, and easy to spell. Short names are easier for people to remember and share, while complicated spellings, numbers, or unusual characters can make them harder to pronounce or type.  

Another thing to consider is your naming style. Some businesses prefer descriptive names that immediately explain what they do, while others choose suggestive or coined names that suggest storytelling and creativity.  

Also make sure your business name is unique so you won’t run into legal headaches. Distinctive names usually get stronger protection under trademark rules, and they also make it easier for customers to find you online. 

Finally, put your name through a quick reality check. Say it out loud, write it down, and picture how it would look on signage, labels, and even a small mobile screen. If it feels natural in all those settings and still carries the right impression, you’re on the right track. 

Check availability 

Now you have a name, but before you commit to it, do a quick search online and on social media to see if anyone else is already using it. This step helps you spot potential conflicts early and gives you an idea of how original your choice really is. 

You’ll also need to verify it legally by checking with your state’s Secretary of State office to see if the name is already registered by another business.  

Each state has its own database, and running a search there helps you avoid conflicts before filing. If you plan to operate across multiple states, it’s also worth checking for conflicts at the federal level through the U.S. Patent and Trademark Office (USPTO). 

Keep in mind that registering your business name with the state doesn’t automatically give you trademark protection. To secure broader rights, search the USPTO database to see if similar trademarks already exist, and consider filing your own. 

Think long term 

Perhaps you’ve opened in a new city, added a different line of products, or shifted into a broader market. The name you choose today should still feel like a natural fit then, not something that holds you back. 

And once you’ve found the right name, carry it with you everywhere. Use it the same way on contracts, invoices, websites, packaging, and even social media.  

The more consistently people see it, the faster they’ll connect it to you—and the stronger your brand identity will become over time. 

If you’re planning on establishing your business online, our guide on how to start a business online will walk you through the process step by step. 

Step 4. Choose a business structure 

The business structure you choose affects taxes, paperwork, liability, and how easily you can raise money or add partners.  

You can choose from: 

• Sole proprietorship 
• Partnership 
• Limited liability company 
• Corporation 

Sole proprietorship 

The simplest way to start a business is to own and operate it yourself. This kind of setup is cheaper, and you keep all the profits. But the downside is that there’s no separation between you and the business. If the business owes money or is sued, your personal assets are at stake. 

Partnership 

A business run by two or more people. Profits and responsibilities are shared, and setup is quick. The risk is that each partner is personally liable for business debts, so it’s best to create a written agreement that outlines roles, decision-making, and how profits will be split. 

Limited liability company (LLC) 

An LLC creates a legal separation between you and the business. This means your personal assets are all protected if the company faces debt or legal problems.  

It’s more formal than a sole proprietorship but less complicated than a corporation, which makes it a popular choice for small and growing businesses. 

Corporation 

A corporation is a separate legal entity, which means the business itself, not the owner, is responsible for debts and obligations.  

This structure makes it easier to raise money, issue stock, and expand. There are two main types of corporations: 

• C-corp. A C-corp is a corporation that pays its own taxes as a separate entity. Owners then pay taxes again on any profits they receive, but the benefit is that a C-corp can have unlimited investors, which makes it popular with larger companies and startups that want to raise money. 
• S-corp. An S-corp is a corporation with a special tax status. Instead of paying taxes twice, profits go straight to the owners’ personal tax returns. But there are limits on how many shareholders it can have, so it usually works better for smaller businesses. 

When choosing a structure, also think about: 

• Taxes. Sole proprietorships, partnerships, and LLCs often use “pass-through” taxation, meaning profits go straight to your personal tax return. Corporations are taxed separately, which can sometimes reduce your tax bill but adds more complexity. 
• Funding. If you plan to raise money, investors usually prefer corporations because they can issue stock. On the other hand, service-based businesses or smaller operations often stick with sole proprietorships or LLCs since they don’t need outside investment to get started. 
• Flexibility. Your first choice doesn’t have to be permanent. Many entrepreneurs start with a simple structure like a sole proprietorship or LLC for lower costs and easier setup, then transition to a corporation once they need more protection or outside funding. 

The structure you choose doesn’t have to be permanent. Many business owners start with sole proprietorship or LLC to keep costs low, then switch to a corporation later when they need more protection or investments.  

Step 5. Complete legal registration and licensing 

Making your business official means you’ll need to register it properly and secure the right licenses and permits to operate legally.  

The process usually looks like this: 

1. Register your business 
2. Get an EIN 
3. Understand license and permit levels 
4. Know where to find your exact requirements 

1. Register your business 

File your business with the state so it’s legally recognized. This process depends on your structure: sole proprietorships may only need to register a business name, while LLCs and corporations require formal paperwork such as Articles of Organization or Incorporation. 

In some cases, you may also need a “Doing Business As” (DBA) filing. A DBA is required when you want to operate under a brand name that’s different from your legal name or company name.  

For instance, if your legal name is Anna Lopez but you want to run a catering company called Flavor Street Catering, filing a DBA allows you to legally use that brand name without forming a separate business entity 

2. Get an EIN 

An Employer Identification Number (EIN) is a unique tax ID for your business, similar to a Social Security number for individuals.  

It’s issued for free by the Internal Revenue Service (IRS), the U.S. agency that collects federal taxes.  

You’ll need an EIN to open a business bank account, hire employees, or file taxes as a partnership or corporation. Even sole proprietors get one to keep their personal Social Security number off business documents. 

3. Understand license and permit levels 

Requirements vary depending on what you do and where you operate. They usually fall under three levels of government:  

• Federal. Only businesses in highly regulated industries need federal licenses, such as alcohol, firearms, aviation, drug manufacturing, or broadcasting. 
• State. Many states require a general business license, while others regulate specific professions like contractors, accountants, or healthcare providers. 
• Local. Most cities and counties require a general business license to operate legally in that area. They may also issue permits for zoning, signage, health and safety, or building use.  

Here are examples of licenses and permits you can find but take note that it would still depend on your business: 

• General business license. Often required by your city or county for any business operating within its limits. 
• Sales tax permit. This lets you collect and send sales tax to your state when you sell products or taxable services. 
• Health permit. Required for businesses that prepare, handle, or serve food. 
• Professional license. Needed for regulated professions like lawyers, doctors, contractors, or real estate agents. 
• Zoning or home occupation permit. Ensures your business location, including a home office, complies with local zoning laws. 

4. Know where to find your exact requirements 

No two businesses are the same, so it’s best to confirm what applies to you: 

• Visit your state’s business portal (like Maryland Business Express) for registration and licensing details. 
• Contact your city or county clerk’s office for local permits and zoning rules. 
• Use the SBA website to find links to federal, state, and local resources. 

Tip: Don’t guess your requirements. You can check ahead to prevent costly mistakes and keep your business safe. 

Step 6. Secure funding and plan finances 

Even with a strong idea, you’ll need a plan for how to fund your startup and manage finances, so you don’t run into cash flow problems.  

Start with the basics: 

1. Estimate your startup costs 
2. Explore funding options 
3. Start with what you have 
4. Separate your business and personal finances 
5. Keep track of your money 

1. Estimate your startup costs 

List what you’ll need to launch; equipment, permits, supplies, marketing, or a website. Have a clear number to decide whether you can cover costs yourself or need outside funding. 

2. Explore funding options 

If you need to fund your business, there are several ways to raise money depending on your goals and how much you need. 

• Personal savings. Many small businesses start this way because it’s quick and doesn’t settle debt. But the risk is that you’re spending your own money, so only use what you can afford to lose. 
• Microloans or small business loans. These are offered by banks, credit unions, and the SBA. These can give you the cash to get started but come with repayment and interest, so it’s best if you’ve got a plan in place. 
• Grants. Some programs provide money you don’t have to pay back, though they’re usually limited to certain groups like veterans, women, or minority-owned businesses. They’re competitive, but worth looking into. 
• Crowdfunding. Sites like Kickstarter let you share your ideas and raise money from a crowd of supporters. It can also help spread the word about your business, but you’ll need to put in the work to get attention. 
• Pre-orders. This means letting customers pay for your product before it’s released. It’s a way to bring in money early and see if there’s real demand before investing more. 

3. Start with what you have 

You don’t always need a big budget. Many businesses start less than $1,000, depending on the type of business: 

• A tutoring service or freelance gig can often start with under $100. 
• A craft or home-based business might require around $500 for materials and tools. 
• An online shop with inventory could need closer to $1,000. 

When people ask, “Is $1,000 enough to start a business?” The answer is yes, for certain types of small businesses, as long as you keep costs lean and focus on the basics. 

4. Separate your business and personal finances 

Mixing personal and business money can turn into a tax and accounting headache. That’s why you need to open a dedicated business bank account that keeps everything organized. 

This also shows customers you’re serious, and protects your personal finances if problems come up. 

5. Keep track of your money 

Use bookkeeping tools like QuickBooks, FreshBooks, or Wave to record income and expenses. Staying financially organized helps you catch financial issues early, avoid tax penalties, and make smarter decisions as your business grows. 

And if you’re exploring the idea of launching your business online, check our article guide on how much it costs to start an online business for a breakdown of the expenses to expect. 

Step 7. Protect your business 

A single accident, dispute, or issue can wipe out months of hard work if you’re not prepared. That’s why you should secure your business from threats both offline and online. 

To stay safe, your business needs: 

• Business insurance. General liability insurance covers accidents, like if a customer gets hurt on your property. This insurance is useful for service providers in case of client disputes or mistakes. If you hire employees, most states also require workers’ compensation insurance. 
• Digital security. Security is a top priority when you run a website or process payments online. These security features keep your site safe to browse and prevent warning messages from turning customers away.  
• Contracts and agreements. Relying on verbal promises is risky. Written contracts with clients, suppliers, or partners lay out responsibilities, payments, and timelines clearly. They protect you legally while also making your business look professional. 

Step 8. Create a professional business website 

Even if you run a local shop or offer services in person, people will still search for you on the internet. That’s why your business needs a professional website that works as an online extension of your business. These steps will guide you through the process: 

1. Plan your website 
2. Choose and register your domain 
3. Choose a template and design your site 
4. Optimize for SEO 
5. Launch and maintain your site 

1. Plan your website 

Do you want to attract new customers, sell products, or provide information about your services? Decide what your website should accomplish. A simple plan now makes the design and setup much easier later. 

2. Choose and register your domain 

Your domain name is your web address and customers will use that address to find you. Pick something that’s short, easy to spell, and matches your business name.  

Once you’ve decided, register it with a reliable provider so it’s secured under your ownership. When you have a domain name, it will add credibility to your business. 

If you’re a startup or don’t have an idea how to register a domain name, you can check our guide on domain registration. 

3. Choose a template and design your site 

Templates are one of the quickest ways to create a professional-looking site. They come with ready-made layouts you can customize to fit your brand. 

You can change the text, images, and colors to match your business, or use builder tools that suggest a layout based on your style and preferences. 

4. Optimize for SEO 

A website only works if people can find it. Search engine optimization (SEO) improves your visibility when customers search online. Here’s what you will focus on: 

• Technical SEO. Fast loading, mobile-friendly design, and easy navigation. 
• On-page optimization. Naturally include keywords in your titles, headings, and content. 
• Off-page optimization. Backlinks from trusted sites, brand mentions, social media activity, and online reviews. 
• High-quality content. Write useful, engaging copy that answers customer questions. 

If you’re looking to improve your site’s visibility, we offer tools and support to help. Our SEO tool gives you step-by-step guidance if you’d like to handle things yourself. And if you’d rather have someone take care of it for you, our SEO service connects you with experts who can manage the process and help your site perform its best. 

5. Launch and maintain your site 

Before going live, review your website so customers have a smooth experience from the start.  

To get launch-ready, do the following: 

• Test your site on desktop and mobile to make sure it loads quickly and looks good on all screens. 
• Click through every link and button to confirm they work. 
• Double-check that forms, checkout pages, and payment systems function properly. 
• Proofread your content for spelling, grammar, and up-to-date information. 
• Ask someone else to browse your site 

After launch, maintain your site’s performance to avoid anything that damages your brand: 

• Keep content current by updating product details, services, and contact info. 
• Monitor performance with analytics tools to see how visitors use your site. 
• Fix broken links or errors promptly so customers don’t lose trust. 
• Refresh your design, images, or features as your business grows. 

Pro tip: If you’re not sure where to start or want a faster way to build your site, check out our article on how to build a website with AI.  

Step 9. Market your business 

Customers won’t just appear on their own. You need a way to reach them, earn their trust, and give them reasons to choose you over others. That’s where marketing comes in. 

But know first who you’re trying to reach. Where do customers spend their time? Are they scrolling on Instagram, searching on Google, or walking through your local neighborhood? Once you understand your audience, you can choose the right methods to connect with them: online or offline. 

Offline methods 

Traditional marketing still matters, especially if you’re a community-based business. Consider adding these to your marketing mix: 

• Flyers and posters. Place them where your target customers spend time — cafés, gyms, libraries, or community boards. 
• Networking and local events. Attend fairs, markets, or business meetups to meet people face-to-face and spread the word about your services. 
• Business cards. Hand them out when you meet potential customers or partners. A simple card can make your business easier to remember. 
• Word of mouth. Encourage satisfied customers to recommend you to friends and family. A referral often carries more weight than any ad. 

Online methods 

• Social media. Create accounts on platforms where your audience is active and post content that is engaging. This could be promotions, how-to tips, customer stories, or behind-the-scenes updates. The goal is to keep your business visible and relatable. 
• Email marketing. Build a simple list of customer emails, start with people who’ve bought from you or signed up through your website. Send regular updates with discounts, new product announcements, or helpful advice to keep them coming back. 
• Search engine optimization (SEO). Optimize your website so it shows up when people search for businesses like yours. Use keywords in your site content, keep your pages fast and mobile-friendly, and update your site with fresh content so search engines see it as relevant. 
• Paid ads. Platforms like Google Ads or Facebook Ads let you target specific groups of people. Even a small budget can get your business in front of local customers or people searching for exactly what you offer. 

The most effective approach is usually a mix of both online and offline marketing. If reaching nearby customers is a priority for you, you can check hyperlocal social marketing tips to help you stand out in your neighborhood and connect with your customers. 

You can also make your marketing more engaging with storytelling. Sharing real experiences or customer journeys helps people connect with your brand on a deeper level. Check out this guide on storytelling in marketing to learn how to use it effectively. 

Step 10. Grow and stay consistent 

Starting is just the first step of your process, but you need consistency as you go. You need to keep improving, stay flexible, and not stop learning from customers.  

To build steady growth, put these into practice: 

• Listen to your customers. Pay attention to reviews, surveys, and even casual conversations. If customers consistently ask for something new or point out the same issue, that’s a clear sign of where to focus your next move. 
• Expand thoughtfully. Growth doesn’t always mean opening a new location or rolling out new products. Sometimes it’s adding a subscription option, bundling services, or creating a new version of something you already offer. 
• Reinvest your profits. Instead of spending early profits on non-essentials, put them back into your business. This means upgrading equipment, improving your website, or hiring extra help so you can focus on bigger decisions.  
• Stay flexible. Markets, technology, and customer preferences will change over time. What works today may not work a year from now. Being willing to adjust your strategy is what helps your business survive long-term. 

Small business vs enterprise 

Most new owners start as a small business but as your business grows, you may wonder what it takes to operate like an enterprise.  

This table show you how they work differently and help you with your process: 

Factor	Small Business	Enterprise
Size	Usually under 100 employees  Low to moderate annual revenue	Hundreds or even thousands of employees  Can generate big revenue streams
Structure	Simple and flexible  One person or a small team do multitasking	Complex, with specialized departments like HR, finance, legal, and IT
Market reach	Local or regional Serves a focused customer base.	National or global,  Serves multiple industries or markets at once.
Products and services	Narrower range  Focuses on one offering	Wide variety of products and services It has room to invest in new ventures.
Resources	Limited funding  Relies on personal savings, small loans, or local investors	Strong financial backing with access to large investments Advanced in technology, and global talent.

Common mistakes to avoid when starting a business 

Starting a business is exciting, but it’s also easy to make mistakes that slow you down or cost you money. Let’s categorize and explain each one: 

• Planning & strategy mistakes 
• Financial mistakes 
• Legal & administrative mistakes 
• Operations & marketing mistakes 
• Team & growth mistakes 

Planning & strategy mistakes 

Launching a business without a solid plan puts you and your business at risk. Without a clear roadmap for your goals, expenses, and customer outreach, you may confuse your audience and waste valuable resources.  

Skipping market research is another major pitfall; guessing what customers want and ignoring your competitors can lead to building a product or service that no one truly values. 

When you’re unable to define a specific target audience it means your branding and marketing efforts will be generic. This leaves you with too much effort but less impact on your customers. 

Financial mistakes 

It’s not always about the lack of sales that damages a business, but it’s also failing to track money coming in and going out. Without financial management, you can put your business at constant financial risk. 

Overspending early is another common issue. Many new owners tend to overspend into offices, logos, or fancy equipment before sales are steady, draining funds that could have been used for essentials.  

Pricing also affects how steady your finances are. Too low and you lose profit, too high and you drive customers away, and without balance your business can quickly run into money problems. 

Legal & administrative mistakes 

Skipping legal and administrative steps will not make your business officially recognized. This can lead to fines, missed tax obligations, or even being forced to shut down.  

Contracts are a crucial step many business owners skip. Relying on handshakes or verbal agreements leaves you exposed when disagreements over payment, scope, or deadlines come up. 

Another area often overlooked is intellectual property. Without trademarks or protections, someone else could copy your work or even claim it legally and push you to deal with legal actions. 

Operations & marketing mistakes 

Relying solely on word of mouth limits your reach and makes your business invisible to potential customers.  

At the same time, customers often point out problems you can’t see yourself and disregarding their input means missing opportunities to improve and earn loyalty.  

Weak online presence is another stumbling block. When people search for you and find nothing, or land on outdated websites and profiles, they’ll assume your business is unprofessional and unreliable. 

Team & growth mistakes 

Team-related mistakes can slow growth as much as financial or legal issues. Hiring too quickly or bringing in the wrong people can lead to turnover, wasted training, and stalled progress.  

On the other end, trying to do everything yourself can cause burnout. Handling sales, bookkeeping, marketing, and delivery alone leaves little time to focus on strategy or growth.  

Finally, refusing to adjust when circumstances change is a trap many fall into. Sticking to a failing idea out of pride or fear keeps you stagnant, while the market moves on and opportunities pass you by. 

Turn your idea into a profitable business today 

Every business begins with an idea, but turning it into reality takes time and commitment. With steady effort and smart choices, that idea can grow into a thriving business. Stay consistent, listen to your customers, and be ready to adapt as you grow. 

And when you’re ready to take your business online, we have everything you need in one place—from registering your domain and building your website to creating a logo, setting up email, and optimizing for search. 

Frequently asked questions