How to start a business in 2023

How to start a business in 2023 (9 recommendations learnt from our experience) 

How to start a business plan guide  

Starting a business can be a daunting task, especially in today's ever-changing business landscape. But with the right mindset, tools, and strategies, you can turn your dream into a reality. Starting a business takes more than just a good idea; it requires careful planning, execution, and perseverance. In this guide, we will walk you through the essential steps you need to take to start a successful business in 2023. We will also share real-life stories and insights from successful entrepreneurs and customers, giving you a glimpse into the challenges and rewards of building a thriving business. Whether you are a first-time business owner or an experienced entrepreneur looking to launch a new venture, this guide will equip you with the knowledge and tools you need to start your journey towards success. 

1. Define your business idea. 

Most of the business advice encourages you to make money from what you enjoy doing, but it leaves out two other crucial factors: it must be profitable and something you are skilled at. One of our customers, John, a marketing executive, wanted to start his own business. He spent time researching the market and identified a gap for a marketing agency that specialized in helping small businesses. By leveraging his expertise and experience, he developed a unique value proposition and business model that addressed the needs of his target customers. With a clear and compelling business idea, John was ready to move on to the next step of starting his business. 

Still not sure about what your business brilliant idea is. Start by asking yourself the following questions: 

• What do you love to do? 
• What do you hate to do? 
• Can you come up with something that would simplify those situations? 
• What do you excel at? 
• What do people ask you for guidance on? 
• What topic would you choose if you had ten minutes to give a five-minute speech on? 
• What is something you've always wanted to accomplish but couldn't because of a lack of funds? 

These questions may spark an idea for your business. Or, if you already have an idea, they might be able to assist you develop it further. Your company does not have to be the next Uber or Tesla. Instead, you may improve on an existing product. You could also sell a digital product, which has less overhead… There are countless options. 

However, you should be clear on what sets you or your business idea apart? How are you different from the others?  

If market research suggests that your product or service is oversaturated in your location, consider an alternative approach. Like LUSH, the cosmetics maker. What distinguishes LUSH from competitors such as Sephora or Etsy? Handcrafted items. LUSH supporters are committed to ethical purchasing and are captivated with the purity that comes from a handcrafted goods. The company's greatest success has come from understanding that its core buyers prioritise social and business responsibility over a lavish and out-of-reach image. 

2. Conduct a feasibility study. 

Evaluate the viability of your business idea by assessing the market, competition, and financial resources required.  

Researching the market is important to understand the demand for your product or service. You can do this by analysing market trends, looking at the size of your target market, and identifying any gaps that your product or service can fill. You can also gather information by talking to potential customers or by conducting surveys and focus groups.  

Let's say you want to start a small business selling homemade ice cream. You want to determine if there is enough demand for your ice cream in your local area before investing in a storefront or website. When Ben Cohen and Jerry Greenfields made the decision to launch their first scoop shop in Vermont Ben and Jerry’s, they followed that path. In order to determine how many people would pass by the corner street where the shop would be located, they really took a counter, counted them and analysed their profiles. Luckily, we have more technology and resources available now to aid in conducting this research. 

Here are some steps you can take to do market research: 

• Identify your target market: Think about who is most likely to buy your product or services, like the home-made ice cream. Are they families with children, college students, or health-conscious individuals? Once you have a clear idea of your target market, you can tailor your research to their needs and preferences. 

• Conduct a survey: Create a simple survey using a tool like Google Forms or SurveyMonkey, and share it with your target market through social media, email, or in-person. The survey should include questions about their ice cream preferences, how often they buy it, and their willingness to pay for homemade ice cream. 

• Analyze the results: Once you've collected enough responses, analyze the data to identify trends and patterns. Look for common preferences among your target market, such as a preference for gluten-free or vegan options, or a willingness to pay a premium price for high-quality ingredients. 

• Research the competition: Look for other local businesses that sell ice cream, and analyze their products, prices, and marketing strategies. This can help you identify gaps in the market that you can fill with your unique product. 

By following these simple steps, you can gain valuable insights into your target market and determine if there is enough demand for your product before investing too much time or money into your business.  

Next, you will want to assess the financial resources required to start and operate your business. This includes estimating your start-up costs, such as equipment, inventory, and marketing expenses, as well as your ongoing expenses, such as rent, salaries, and utilities. You will also want to create a financial projection that outlines your revenue and expenses over the next several years, including your break-even point and potential profitability. We will get into more details. 

Another important factor to consider is regulatory requirements, such as permits, licenses, and taxes. You will want to research the local and national regulations that apply to your business and ensure that you comply with all legal requirements. 

By conducting a thorough feasibility study, you will gain a clear understanding of the opportunities and challenges of starting and running your business. This information can help you make informed decisions about your business idea and increase your chances of success. 

3. Develop a business plan. 

Create a roadmap for your business that outlines your mission, vision, goals, strategies, and financial projections. A business plan can also help you secure funding and partnerships. 

What should it include?  

• Executive summary: This should be the first section in your business plan, but it's often best to write it last. It provides a high-level overview of your proposed business, including its goals and the methods you'll use to achieve them.  

• Company description: Explain how your product or service solves a specific need and why your company or concept is well positioned to succeed. For example, if you have a background in sports and have used that knowledge to develop a new type of athletic clothing, you can highlight your expertise in professional athlete health performance and explain why your product is superior. 

• Market analysis:  Evaluate how well your company is positioned relative to its competitors. It should include a target market analysis, segmentation analysis, assessment of the competitive environment, market size, growth rate, and current trends. 

• Organization and structure: Give information on the type of business organization you expect, risk management measures you propose, and who will be on the management team. Will your company be a sole proprietorship, a limited liability company (LLC), or a corporation? 

• Mission and goals: Write a brief mission statement and detail what the business wishes to accomplish and the steps to get there. These goals should be SMART (specific, measurable, action-orientated, realistic, and time-bound). 

• Products or services: Describe how your business will operate. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, how much your products cost, who will be responsible for creating the products, how you’ll source materials and how much they cost to make. 

• Background summary: Compile and summarize any data, articles and research studies on trends that could positively and negatively affect your business or industry. 

• Products or Services: They represent the value that a business provides to its customers, and the revenue streams that sustain the business over time. When describing the nature of your business and its products or services, it is important to provide a clear and concise explanation of what you will be offering and how it compares to existing products or services in the market.  

• Marketing plan: The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis and analyzes competitors. It also discusses how you’ll promote your business, how much money will be spent on marketing and how long the campaign is expected to last. 

• Financial plan: The financial plan is perhaps the core of the business plan because, without money, the business will not move forward. Include a proposed budget in your financial plan along with projected financial statements, such as an income statement, a balance sheet and a statement of cash flows. Usually, five years of projected financial statements are acceptable. This section is also where you should include your funding request if you’re looking for outside funding.  
  
  

4. Register your business. 

Registering your business is an essential step to ensure your business is recognized as a legal entity. Here are some important things to consider: 

• Choose a business name: Your business name is an important part of your brand identity. Choose a name that's unique, memorable, and reflects your brand values. Check with your state's business registration office to ensure your chosen name isn't already taken. 

• Choose a legal structure: Choose a legal structure that best suits your business needs, such as sole proprietorship, partnership, LLC, or corporation. Each has its own advantages and disadvantages, so do your research before deciding. 

• Obtain necessary permits and licenses: Depending on your industry and location, you may need to obtain specific permits and licenses to operate your business legally. Check with your local government or industry associations to ensure you have all the necessary permits and licenses. 

• Obtain an Employer Identification Number (EIN): An EIN is a unique identification number issued by the IRS for tax purposes. You'll need one if you plan to hire employees or if you're operating as a partnership, LLC, or corporation. 

• Register for state and local taxes: You'll need to register with your state's tax agency to collect and remit state sales tax. Depending on your location, you may also need to register for local taxes, such as city or county sales tax. 

• Register for trademarks and patents: If you have a unique product or service, consider registering for trademarks and patents to protect your intellectual property. This can help prevent others from using your ideas or products without your permission. 

• Obtain insurance: this could include general liability insurance, property insurance, workers' compensation insurance, or professional liability insurance, depending on your business type and industry. Shop around for insurance policies to ensure that you're getting the coverage you need at a reasonable price. 

5. Organize your finances. 

• Separate your personal and business finances: It's important to keep your personal and business finances separate. This will make it easier for you to manage your cash flow and will help you to avoid tax issues. You can achieve this by opening a business bank account, which will require your business name and tax identification number (EIN). This account can be used for business transactions, such as paying suppliers or invoicing customers. Additionally, having a separate business bank account may be required by lenders if you plan to apply for a business loan or line of credit. fidomoney provides customised business accounts to meet your specific needs, making banking simple and efficient. Enjoy simple account administration, local and international payments, and reliable customer support. 

• Manage your finances with accounting software or a bookkeeper: To keep track of your business's finances, consider using accounting software or hiring a bookkeeper. Accounting software can help you to manage your inventory, track your income and expenses, generate invoices, and calculate taxes. If you prefer to outsource this task, there are many bookkeeping services available that can provide these services online or in-person. 

• Calculate your startup costs and break-even point: Before launching your business, it's essential to calculate your startup costs. This will include the cost of supplies, professional services, licenses, permits, office space or real estate, payroll, and benefits. Overestimating your startup costs is recommended to ensure you have enough cash on hand to cover at least six months of operating expenses. Once you have determined your startup costs, you need to calculate your break-even point, which is the point at which your business starts to make a profit. This figure will help you to understand when you can expect to see a return on your investment. 

Break-even point = Fixed costs / Contribution Margin 

Contribution Margin = total sales revenue – production cost 

Let’s say you are opening a new bakery that sells bread and pastries in the neighbourhood. You have determined the cost of production, which is £5000 in startup costs. Your variable costs are $0.20 per baguette produced, and you sell them for $1.50 each. 

This means that you need to sell at least 3846 units just to cover your costs. If you can sell more than than that in your first month, you will make a profit. 

6. Fund your business. 

Determine how much capital you need to start and grow your business, and explore funding options such as loans, grants, investors, or crowdfunding. 

There are different ways to finance your business, but they can be divided into two categories: internal and external. 

Internal funding options include your personal savings, credit cards, and funds from friends and family. However, using personal funds or credit cards to finance your business can put you at risk of losing your personal wealth if the business fails. Additionally, accepting money from friends and family can cause strained relationships if the business is unsuccessful. 

External funding options are available for businesses that want to minimize these risks. You can explore small business loans, grants, angel investors, venture capital, and crowdfunding. It's important to determine how much money you need, the timeframe for repayment, and your risk tolerance before choosing a funding option. 

Some specific external funding options include invoice factoring, business lines of credit, equipment financing, SBA microloans, and grants. Crowdfunding allows you to raise money from a large group of people by soliciting donations or selling equity in your company. 

It's important to research each funding option carefully and choose the one that best suits your business needs. Keep in mind that your ultimate goal is profitability, so choose a funding source that allows you to achieve that while minimizing risk. 

7. Invest in the proper business tools. 

Having the right business tools can save you time, streamline your operations, and improve your decision-making. Consider incorporating the following tools into your business operations: 

• Accounting software: This tool helps you track your business's finances, manage your expenses, create financial statements, and file taxes. Popular examples include Zoho and Xero. 
• Customer Relationship Management (CRM) software: A CRM tool helps manage your customer interactions, track sales and marketing data, and automate tasks like customer service and follow-ups. We use HubSpot at fidomoney. 
• Project management software: This tool helps you plan, execute, and track projects. You can also use it to manage employee tasks and allocate resources. Popular examples include Asana and Trello. 
• Credit card processor: This tool allows you to accept credit card payments from your customers.  
• Point of Sale (POS) and Merchant Services: A system that enables you to process customer payments. Some accounting and CRM software have built-in POS features. fidomoney can offer help with you thanks to merchant services offer.
• Virtual Private Network (VPN): This tool provides a secure, private connection between your computer and the internet. It is crucial for businesses that handle sensitive data.  
• Email hosting: This tool enables you to create a professional email address with your own domain name. Some popular examples include G Suite and Microsoft 365. 

8. Market your business. 

Marketing is just as important as product development, and it should be considered from the beginning. Allocate a budget for marketing, and be sure to include it in your overall business plan. Creating a marketing strategy can help you reach your target audience and get the word out about your products or services. 

• Build a website: Having a website is essential in today's digital age. It's often the first place customers go to learn about your business, so make sure it's well-designed and easy to navigate. Consider hiring a professional web developer if you're not comfortable building a website yourself.  

• Optimize your website for search engines: Search engine optimization (SEO) is the process of improving your website's visibility in search engine results pages (SERPs). It involves using relevant keywords, creating high-quality content, and building backlinks to your site. A well-optimized website can help drive traffic and increase sales. 

• Create quality content: Creating valuable content is a great way to engage with your audience and build brand awareness. Consider starting a blog or producing videos that showcase your products or services. Make sure your content is informative, entertaining, and shareable. 

• Get listed in online directories: Listing your business in online directories can help improve your visibility and drive traffic to your website. Focus on directories that are relevant to your industry and target audience. Be sure to keep your information up-to-date, including your address, phone number, and hours of operation. 

• Develop a social media strategy: Social media is a powerful marketing tool that can help you connect with your customers and build brand loyalty. Determine which platforms are most relevant to your target audience and focus your efforts there. Create a content calendar and post regularly to keep your followers engaged. Consider using paid social media advertising to reach a wider audience. 

9. Build a team. 

Identify the key roles and skills you need to run your business, and recruit talented and passionate individuals who share your vision.  

“The better you are at surrounding yourself with people of high potential, the greater your chance for success” – John C. Maxwell 

It takes time, work, and commitment to launch a small business. Yet, if you are ready to put in the effort, it can be an excellent approach to realize your aspirations and goals. Make sure to conduct thorough research, develop a good business plan, and pivot as needed. After you are up and running, remember to stay focused and organized so you can keep growing your business. And ask for help with needed, your partners are there to help you succeed.