21 Steps Checklist for Starting a Business

If you are an entrepreneur with a strong idea but are unsure what to do next, use this checklist for steps on starting a business. We will leave no stone unturned, from preparing and testing your hypothesis to figuring out what to charge clients or buyers.

By: Brad Nakase, Attorney

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As our nation and the entire globe begins to recover from the challenges of the Covid-19 pandemic, new business opportunities abound. We will be dealing with the virus and the pandemic for many years to come, and we are not out of the woods yet. However, the world has begun to reopen, and the future is bright. Many economists, in fact, think that our economic future shines brightly and that momentum is building for entrepreneurs around the world. Many individuals spent part of the lockdown finally fine-tuning the business idea they’ve been debating for years, and we think now is the time to take that idea seriously and share it with the world.

Starting a Business Checklist

1) Create a Comprehensive Business Plan

If you have a concept or product that shows promise, it is never too early to begin working on a business plan. Helpful when applying for bank loans and other funding, your detailed schedule will also serve as a comprehensive guide for your business. Essentially, a business plan shows interested parties that you have fully explored the market and done your targeted research. A solid business plan is also helpful in finding financing and describing exactly how you plan to accomplish your goals. Future sales, where demand can be found, and even ideas regarding pricing can be found in company business plans, though they tend to differ slightly based on industry. Writing a business plan is also a critical individual step for the prospective business owner, as it signifies a commitment to the project and a turning point towards a new venture.

2) Test Out the Concept Repeatedly

As you work on your business plan, you should also be doing as much research and analysis as you can in order to be able to support the fact that there is good demand for this idea. It is crucial for individuals to ensure that a different company does not already have the market cornered in this industry and to establish that there is a legitimate demand for your goods or services. If this product already exists, you may have to recalibrate it, and you do not want to find that out after you launch your startup. The more effectively you can reliably demonstrate demand for your idea, the more interested people will be.

Also, if this step creates stress because your concept or service is either not as original as you thought, or others do not see demand for it: do not worry. Many entrepreneurs ultimately find success cycle through numerous ideas and concepts—with some problematic results—before landing on the one that is successful.

3) Develop a Sales Pitch

When an individual can describe precisely what their product will do and why it is valid in just a few words, they are onto something. The key to pitching your idea is zeroing in on what makes it different than other entrepreneurs’ ideas. An “elevator pitch” is a term used in various industries, and it mainly consists of a brief, exciting description of your idea that could be finished in one elevator ride.

Many individuals overlook one aspect when carefully crafting a sales pitch: why people should care about this product. Also, make sure to include the idea of your target demographic. Finally, keep in mind that brevity is also vital in your sales pitch—if it goes longer than 3-4 sentences, you might want to cut it down.

4) Choose a Structure for Your New Business

It is your responsibility to legally register your startup, and this involves choosing a structure. Also, you should want to complete this step because it will make you an “official” freelancer and undoubtedly be seen as more legitimate. Here are three main structural choices, but there are other options, such as a nonprofit, that you could also choose from.

Corporation (S Corp, C corp)

Some entrepreneurs avoid this structure because of the unnecessary benefits awarded, higher costs, and more complicated arrangements. However, in some cases, a corporation is feasible and works well for the business.

Limited Liability Company

While LLCs are popular with many business owners, they can also prove a challenge for startups. This is because, generally, they are more costly to start and a bit more complex to establish and run. However, a significant advantage here is that LLCs are structured so that the individual is not liable for the business; therefore, there is some financial freedom there and a better tax arrangement.

Sole Proprietorship.

While sole proprietorships are relatively easy to start as well as affordable, individuals are liable for the finances of the business, unlike the conditions present in an LLC. However, combining low accountancy fees with an easy startup makes this structure a popular and viable choice.

In any case, from a sole proprietorship to an LLC or even a nonprofit: the manner in which you structure your business will impact your tax structure and sense of personal liability.

When choosing a business structure, it is also helpful to consider your future objectives. When individuals find that they have more questions about startup business structure, it makes sense to contact a licensed business attorney for advice.

5) Raise Capital Through Funding

Luckily, there are many ways to fund a new business these days, and it seems as though the options are continually growing. Some options available to entrepreneurs and startups are:

Crowdfunding (Sites such as GoFundMe
Loans from the SBA (Small Business Association)
Short-term loans
Venture capital
Friends and Family
Angel investments
Working capital loans

These days, many startups receive a boost from friends and family, but that does not mean that it is the right choice for your business. Funding is one of the most critical aspects of the startup journey, but it is essential for individuals to raise money in comfortable ways. Remember that top-notch business plan you created? That plan should include thoughts and options about funding, so start there.

6) Get the Proper Licenses and Permits.

We wish we could be more specific here, but the correct permits for your exciting new startup venture will vary greatly depending on your location. The same goes for licenses. Depending on their industry, many entrepreneurs begin small, working from home offices home and therefore saving on rental fees. However, it is essential to note that a specific license is needed for an at-home business. We encourage you to run some online searches for your own in-state requirements, and contacting a qualified business attorney is never a bad idea when you are starting a company, no matter what stage you are at.

It is also true that some companies, such as coffee shops or eateries, require specific licensing that enables them to serve food and drinks to the public, for example. Your startup may only need one license, but it also could necessitate several. Visiting the Small Business Association website usually helps prospective small business owners figure out what they need.

7) Open a Bank Account for the Startup

When a business officially opens to the public, it is crucial that they have a separate bank account stamped for “business use only.” Especially for startups, the lines between an entrepreneur’s business finances and personal financial picture can grow blurry. Maintaining a clear separation between these different accounts will keep the business organized and the revenue stream easy to track. Then, when tax season rolls around, you will be glad that you set up a bank account for your business. Also, small companies sometimes can find banks that prefer to do business with small companies and will offer incentives and deals.

While you are setting up your new account, we would also recommend inquiring about a business credit card. For a small startup, both having some spending freedom and being able to establish credit can be helpful.

8) Continue to Develop Your Product

Many promising entrepreneurial ideas are based on a new item, whether it is an app, a new type of healthy fruit juice, or a pen that writes upside-down. When their business idea relies on a specific physical entity or invention, some entrepreneurs find that they need assistance actually moving the product from the theoretical to the literal. Finding a partner—for instance, in the manufacturing world—who is invested in your idea and wants to help create and distribute it can mean the difference between making sales and making mistakes.

9) Set Up an Accounting System

We’ve all felt unprepared when tax time arrived in the spring, but if you take the time to set up a trusted accounting system and record all spending and sales, your startup will be in good shape. Breaking down expenses and revenue into categories can help, especially if you do not have the budget yet for an accountant. We recommend using these standard categories:

Cost of inventory
Revenue of the business
Additional costs (for example, rent, employee payroll, and other overhead costs)

Online accounting tools are valuable and affordable and can be great tools for young businesses.

10) Decide on a Sales Location

We are in the midst of a sales revolution, with more and more vendors in different industries deciding to espouse traditional brick-and-mortar stores and sell exclusively online. Many startups try out their sales techniques and gauge demand by setting up pop-up sales, and others go the conventional route of renting a small space from which to sell their products, advertise, and network. Much of this depends on the product itself and the industry, and there is no right or wrong way to go about it. Your valuable market research will inform your sales location, but if you are looking to launch your startup as cost-effectively as possible, starting online can prove an easy choice. Also, some companies began online and then set up physical stores after establishing themselves, such as the hip eyewear giant Warby Parker.

11) Discuss a Lease

If you have decided that your business will work best with a physical property to sell your products or services out of, then the time to start your real estate search is now. Before you contact a real estate agent, we suggest doing some research so that you know exactly how much space you need and where your ideal locations are. Next, be honest with yourself and your business in deciding what you can afford, and do not forget to factor in any improvements or adjustments you will need to make to the property. Then it will be time to negotiate a lease for your new company. We cannot say this enough: make sure to read the leasing contract carefully before signing it because once you have signed it, you are committed. Having a business lawyer go over the lease with you and answer any questions you may have is definitely a prudent move in this case.

12) File for a Patent or Copyright

When entrepreneurs are ready to move forward with their goods or services, it is a smart move to protect their intellectual property. This can be done by filing for a trademark or copyright for the business’s logo, name, ideas, or creations. Individuals can also patent their product designs or the specific services they offer. Many of us have heard of cases involving copyright infringement or intellectual property, and unfortunately, these lawsuits can plague and harm businesses. Making sure that you have the proper trademarks and copyrights in place is a wise move, and it makes sense to consult with an attorney concerning the protection of your intellectual property. This is an essential step and not to be overlooked.

13) Name the Startup

Often heralded as one of the most fun and creative steps to building a startup, naming the business can also be a complex process. Some entrepreneurs have had a list of business names on a legal pad for years, and some are open to suggestions, but one of the keys here is to first match the business name with the structure. For example, if you are starting out with a sole proprietorship, you do not have much choice. You must use your legal name as the business name unless that is you would like to use a DBA name or fictitious name. Don’t worry: this is up to you, and you can always change your company’s name.

For the other business structures, you have more freedom, but you will want to conduct several extensive searches, online and with your state, to ensure that your name is unique and not already in use. For this reason, we suggest having 3-4 options to choose from. Once you have searched for competing names, you will officially register your business name with the state—check the secretary of state’s website for more information—and then you will be ready to go.

Lastly, remember this: your name should tell the story of your business. It should be simple and memorable but also exciting and maybe even eye-catching. Your logo and name should work together to form a business title and label that pulls clients and customers in for the first time, so do not be afraid to test out your name on friends and family, and stay open to the process. Also, once you have decided on a name, or a few different words, check to see if the domain titles you would prefer are also available. This can help make the decision a bit easier.

14) Establish a Domain and Website

Now that you have named the new startup, do yourself a favor and reserve your domain name, getting the terms as close as you can to the chosen title itself. Now, you are ready to create a comprehensive, easy-to-navigate website for your business. Now more than ever, a website that looks clean and works quickly and efficiently is one of the best ways to bring in and establish new clients and keep old customers coming back.

If you think of your website as a way to tell your startup story, you will include the correct details and information. Suppose you are focused on your brick-and-mortar store now and holding off on selling online. In that case, it is still essential to have a business website that includes a description of your business and what you do, what it is you are selling, and contact information.

If you are not sure how to start the website process, there are a few choices. Platforms such as Squarespace offer easy-to-use templates that do not require much or any designing experience. If that sounds overwhelming, or you do not have the budget, you can find a designer to help you. The majority of the time these days, however, the entrepreneur or someone on their team is able to create a website using a website builder such as WordPress. Also, before starting the process, we suggest checking out some of the websites that companies in your industry use and see what you like and want to emulate.

15) Obtain Insurance

Clearly, the insurance policy you decide on relies on your company size and the number of employees that you are starting out with. However, did you know that your policy will also be dependent on your liabilities and assets? The insurance policies that you need for your business are different from those you may be used to, so get a recommendation for a trusted insurance agency and speak with an agent. They will fill you in on whether or not your business needs:

Property insurance
Vehicle insurance (business)
Worker’s compensation insurance
Health insurance (small business)
Product liability
General liability

There may be other policies that are recommended to you based on the size of your startup and your industry, so do not neglect this vital step.

16) Obtain Basic Tools and Systems

Many startups begin with a bare-bones approach: a home office, a single product line, and 1-2 employees, if that. However, while you can espouse the large office, cappuccino machines, and conference rooms, for now, you will need a few essential tools that will allow you to get the word out, stay in touch with customers, receive orders, and send out or sell your products. These will include telephone service, a cellular plan for your business, a strong wifi signal, computer, and computer software, a POS system, and a place to safely store whatever you are selling. Depending on the nature of your business, a vehicle may also be needed.

17) Make Sure the Startup is Registered

One of the last essential steps to forming a promising new startup is registering the business. Depending on the location and nature of your company, you will need to register with your state or possibly the federal government. Online research will help you figure out what is expected in your state. For example, in California, all businesses—startups included—need to register with the secretary of state, and this can be done online. In general terms, however, when companies seek to file for trademark protection or require a federal tax ID, they must do so through the federal government.

18) Hire Employees

If adding employees to your operation is part of the plan, then this is the time. The better, the earlier you can get your first employee or employees in the groove. Some startups wait to hire employees because of budget concerns, and some find success by adding one or two people that they can trust, know well, or have worked with before. Hiring workers should make things easier for you, not complicate things. Training is essential, too, so get started early and be sure to clearly express your expectations for any and all employees. Communication is key regardless of whether an entrepreneur hires a manager or an hourly worker or decides to partner up with a like-minded business enthusiast.

19) Socialize on Social Media

We live in an age in which companies not only advertise through their chosen socials—they actually sell goods and have one-on-one conversations with interested customers. The power of these tools cannot be underestimated, and research tells us that a lot of new brand discoveries and establishments occur on social media these days. It goes without saying that before you launch your startup, you should have profiles and handles on Twitter, Instagram, Facebook, and more. Generate a buzz with pictures of your products, make cheerful, exciting announcements (Happy Friday, We Open in Three Days!), and network with friends, fans, and colleagues. Eventually, you might launch new products and link to an online store, but for now, just make sure to announce your grand opening on every platform you can.

20) Publicize your Grand Opening

You have waited a long time for this day and worked many hard hours. It is almost time to open up shop, but first, it is time to publicize. We believe in celebrating the grand opening of the business you have worked so hard to create, as long as you do not break the bank. It is free to advertise on social media, so that is a no-brainer. After setting that up, change the homepage of your website to add a little more advertising shine. Here are some other options to look into, depending on your budget:

Local or national newspapers and magazines
Local television or radio
Networking with local businesses who might help you spread the word
Flyers placed in surroundings (check legal codes first)

There are various ways to publicize and entice people to come to check out your physical store. If you do not have a physical brick-and-mortar yet, you could run a discount on your goods to start. If you do, why not provide free food (pizza and hot dogs are inexpensive) or hire a local band to play? Make your opening into an event for the ages, and people will remember your product. Also, as the entrepreneur, get out and meet people. Instead of hiding behind the cash register the entire time, shake some hands and make some small talk. You’ve worked hard for this chance—enjoy it! Lastly: why not try working with a social media influencer? These days, this is one of the quickest ways to stir up a little more publicity, as long as you can afford their “influence.”

21) Open Up Shop!

Congratulations, you have made it through the startup journey. Remember when you began writing your business plan? Now, you have established not only a product or service but a brand that will last. There will be challenges along the way, undoubtedly, and many choices to make, but these steps have provided a framework for startup success. Good luck.

For all additional questions about officially launching a startup, please consult with our skilled, licensed attorneys at Nakase Wade. We have helped numerous small businesses find their footing and can answer all your questions about contracts, licensing protection of intellectual property, and more. Contact us for a free consultation today.

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