Business startup checklist: Everything you need to get started
Starting a new business is an exciting yet challenging endeavor. Having a comprehensive checklist can help you stay organized, avoid common pitfalls, and monitor compliance with legal requirements. This business startup checklist covers the essential steps you need to take to get your new venture off the ground successfully.
1. Conduct market research
Market research includes studying information about consumer behavior and economic trends to help you test your business idea and create a better business plan. Before diving into your new business venture, it's crucial to understand your market thoroughly. Conducting comprehensive market research will help you identify opportunities, assess demand, and refine your business idea.
Key steps in market research include:
- Identifying target customers: One of the first questions you should ask yourself is: who is your customer? Your new business should help a potential customer address a need and solve a problem. They should want your product once they’re aware of it and be able to afford it.
- Analyzing competitors: Identify other businesses in your market. Look at their product and how they’re selling it. Can you do either of these better?
- Evaluating industry trends and market size: Utilize trend-tracking tools to help you collect and analyze consumer data. Refine your new business idea with insight into customer behavior and preferences, competitors, future trends for new opportunities, and data to fuel or back up your decisions. Are there too many similar products already in the market? What do customers pay for these products?
- Assessing potential barriers to entry: Consider what you’ll be up against. Does your small business have the capital to get started, access to distribution channels, and a differentiated product? Does it have the capacity to comply with government policy? Can it scale to meet demand?
By gathering this information, you'll be better equipped to make informed decisions about your business strategy and positioning.
2. Develop a solid business plan
A well-crafted business plan serves as a roadmap for your startup and is essential for attracting investors and securing funding. It also helps a startup or new business assess financial needs and develop a marketing strategy. These details are vital if you plan to pitch investors or need to get a loan. Your business plan should outline your company's goals, strategies, and financial projections.
Key elements to include in your business plan:
- Executive summary: A brief overview that summarizes the most important information about your new business.
- Company description: Include your business name if you have one, organizational structure, industry, value proposition, background information, and business objectives.
- Market analysis: An evaluation of your new business with respect to competitors, target customers, and industry trends.
- Organization and management structure: How your organization will be structured, who the company leaders are, and what the legal structure of your new business will be.
- Products or services offered: A description of products or services your new business will be providing.
- Marketing and sales strategy: A more detailed analysis of target market, value proposition, competitive analysis, promotional tactics, and key performance indicators (KPIs).
- Financial projections: Include sales and pricing strategies, startup expenses, forecasted sales and expenses, income projections, and investor details.
- Funding requirements: Outline the amount of funding needed, intended use of funds, breakdown of costs, type of funding sought, and repayment terms.
Remember to keep your business plan concise, realistic, and adaptable as your business evolves.
3. Choose the right name and business structure
Selecting an appropriate name and business structure is a critical step in your startup journey.
When choosing a business name, a good way to begin is with a wide-ranging brainstorm session which includes making a list of words and phrases that relate to your new business and its offering. Also, bear in mind that it helps if the business names you’re considering are web and SEO-friendly.
Some other steps to take when naming your business:
- Ensure it's unique and memorable: Make sure the business name you choose is easy to remember, catchy, and not too similar to competitors’ names or other popular brand names.
- Check for trademark conflicts: Verify that your name isn’t similar to a registered trademark.
- Verify domain name availability: Check that the domain name is available and matches your new business name.
- Consider how it aligns with your brand identity: Choose a name that’s consistent with your brand and aligns with the common naming conventions in your industry.
There are four main business structures: sole proprietorships, limited liability companies, partnerships, and corporations. As you launch your new business, you’ll need to indicate which type you’ll operate under for legal and tax purposes. Remember, you can always change business types as your business grows.
Common business structures include:
Structure
Pros
Cons
Sole Proprietorship
Simple to set up, full control
Personal liability, limited funding options
Limited Liability Company (LLC)
Limited personal liability, tax flexibility
More complex setup, ongoing compliance requirements
Corporation
Limited liability, easier to raise capital
Double taxation, more regulatory requirements
Partnership
Shared responsibilities, combined expertise
Shared liability, potential conflicts
Choose the structure that best aligns with your business goals, liability concerns, and tax preferences.
4. Register your business and obtain necessary licenses
Once you've chosen your business structure, you'll need to register your company to make it a distinct legal entity. Then you’ll need to obtain the required licenses and permits.
Tax and license requirements vary depending on business type and location. All businesses except for sole proprietorships must register with the IRS and obtain an Employer Identification Number (EIN). You’ll use this just like you would a personal social security number when filing tax returns, opening financial accounts, and applying for licenses. You’ll likely also need to register your business with your state and local governments. Additionally, the operating address of your new business will determine applicable zoning, taxes, and regulations.
Common licenses and permits include:
- Business license: A legal document that allows a business to operate within a specific jurisdiction.
- Employer Identification Number (EIN): A company's federal tax identification which identifies your business for tax purposes. It's similar to a Social Security number but is meant for business related items only.
- Sales tax permit: A document that allows a business to collect sales tax from customers and report those amounts to the state on a regular reporting basis.
- Professional licenses: A government-issued permit that allows professionals in a certain field or occupation to work in a particular location.
- Health department permits: A legal document that mandates businesses meet local health and safety standards.
- Zoning permits: A local permit that certifies that your business is allowed to operate in the zone where it’s located.
Requirements vary depending on your location and industry, so be sure to research local, state, and federal regulations thoroughly.
5. Set up your business finances
Establishing a solid financial foundation is crucial for your startup's success and a basic part of any new business checklist. For small businesses, it’s wise to begin by opening a separate business bank account to keep personal and business finances separate.
Key financial tasks include:
- Setting up accounting software: An automated accounting system will simplify accounting, budgeting, and documentation.
- Tracking expenses and income: Establishing an efficient system for processing orders; paying bills, employees, and taxes; and maintaining permits is key to smooth operation.
- Establishing a bookkeeping system: Accounting software will help you maintain and update small business records including expenses, income, and taxes on a regular basis.
- Setting up payroll (if applicable): Automated payroll will help with keeping track of deductions, taxes, insurance, and more.
- Understanding tax obligations: Business taxes can be complicated depending on the nature of your business. Businesses pay quarterly federal taxes in addition to state and local taxes based on business location, as well as self-employment or payroll, excise, property, and sales tax. Make sure you’re aware of your tax obligations.
Consider working with an accountant or financial advisor to stay compliant with tax laws and make sound financial decisions.
6. Secure funding for your business
Most startups require some form of initial funding to cover startup costs and support growth. There are several funding options available, each with its own advantages and considerations.
Common funding sources include:
- Personal savings: Your own bank account or credit cards.
- Friends and family: The people you know who might be willing to give or loan you money for your startup.
- Bank loans: These loans typically require a business plan, collateral, and a good credit history. The interest rate and loan amount will depend on your business's creditworthiness
- Small Business Administration (SBA) loans: A business loan that is guaranteed by the US Small Business Administration, but is issued by a bank or other financial institution.
- Angel investors: An individual or company that provides capital to a startup or early-stage business in exchange for ownership equity or convertible debt.
- Venture capital: A type of financing that provides financial support and expertise to startups and early-stage companies with high growth potential.
- Crowdfunding: A way to raise funds to launch or grow a business by collecting small amounts from a large number of people, usually online. It’s also a good business test to find out if your product resonates with potential customers.
Choose the funding method that best aligns with your business goals, risk tolerance, and growth plans.
7. Get business insurance
Protecting your startup with the right insurance coverage is essential for mitigating risks and safeguarding your business assets.
Common types of business insurance include:
- General liability insurance: Protects businesses from financial losses if someone is injured on your property or as a result of your company's activities.
- Professional liability insurance: Protects your business if you are sued for negligently performing your services, even if you haven’t made a mistake.
- Property insurance: Protects physical assets from damage, destruction, loss, or theft. It can also cover liability that arises from the use of the insured property.
- Workers' compensation insurance: A type of insurance that provides financial assistance and medical care to employees who are injured or become ill due to their job.
- Business interruption insurance: Helps businesses recover from lost income and expenses when they are unable to operate normally due to a covered event— usually a fire, storm, or natural disaster, and sometimes civil commotion or vandalism.
Consult with an insurance professional to determine the best coverage for your specific business needs.
8. Develop a management system
Establishing efficient systems for managing your business operations is crucial for long-term success. Implement processes for inventory management, sales tracking, and customer service.
Consider using software tools to automate and streamline tasks such as:
- Customer relationship management (CRM): Managing customer interactions to improve customer relationships and grow the business.
- Inventory tracking: Monitoring business inventory to ensure the right amount of stock is available to meet customer demand.
- Project management: Planning, organizing, and managing a project to achieve a specific goal within a set time frame and budget.
- Employee scheduling: Scheduling staff so all shifts are covered, teams get enough breaks and projects are completed on time.
- Accounting and invoicing: Managing a company’s financial operations—including income, taxes, expenses, assets and loans, and records of all commercial transactions between customers and your business.
Automation can help reduce manual effort, improve accuracy, and free up time for strategic activities.
Key considerations before starting a business
Before launching your startup, take time to reflect on these critical factors:
Start-up costs
Carefully estimate your initial expenses, including equipment, inventory, marketing, and operating costs. Be prepared for unexpected expenses and have a financial buffer.
Time commitment
Starting a business often requires long hours and significant personal sacrifice. Assess whether you're ready for the time and energy investment required.
Risk tolerance
Entrepreneurship involves inherent risks. Evaluate your comfort level with financial uncertainty and potential setbacks.
Scalability of the business
Consider whether your business model can grow and adapt to changing market conditions. Plan for future expansion from the outset.
Personal readiness
Assess your skills, experience, and support network. Identify areas where you may need additional training or assistance.
Grow your startup with Rippling
As you launch and grow your business, managing HR, payroll, and benefits can become increasingly complex. Rippling offers a comprehensive platform designed to simplify these essential tasks for startups.
Rippling automatically handles key administrative tasks right out of the box. Payroll is synced to benefits, time and attendance, and more, saving time and minimizing errors. Rippling also automatically flags compliance infractions and recommends a plan of action.
From onboarding new employees in minutes to managing compliance internationally, Rippling provides the tools you need to focus on growing your business.
FAQs about starting a business
What are the 3 tasks a start-up should do first?
Prospective small business owners should:
- Conduct thorough market research: In order to understand your market thoroughly, conduct comprehensive market research to help you identify opportunities, assess demand, and refine your business idea.
- Develop a comprehensive business plan: A good business plan should outline your company's goals, strategies, and financial projections. It will serve as a roadmap for your startup and is essential for attracting investors and securing funding.
- Secure adequate funding: Most startups will require some form of initial funding to cover startup costs and support growth. Several funding options are available, each with its own advantages and considerations.
How long does it take to launch a startup?
The timeline for launching a startup varies depending on the industry, complexity, and regulatory requirements. On average, it can take 3-6 months to complete all necessary steps and begin operations.
How much capital do I need to start a business?
The amount of capital needed varies depending on the type of business, industry, and scale. Startups can range from a few thousand dollars for a home-based business to millions for a tech startup. Carefully estimate your costs and include a buffer for unexpected expenses.
What tools can help manage a new business?
Several tools can help streamline business management:
- Accounting software
- Project management tools
- CRM systems
- HR and payroll software
- Communication platforms
By following this comprehensive business startup checklist, you'll be well-prepared to launch your new venture. Remember to stay flexible, seek advice when needed, and continuously adapt your strategies as your business grows. With careful planning and execution, you'll be on your way to building a successful and thriving business.
This blog is based on information available to Rippling as of October 29, 2024.
Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.