Steps to starting a business

1. Have an idea
Most companies start with a spark of inspiration. Perhaps you've come up with a new product on your own, or you might have discussed how you're going to launch a new business with a potential partner.

You don't need to invent an entirely new product to be successful. In fact, building a business based on something you know customers need may be an easier path.

For example, a new shoe company isn't inventing the shoe. But it can still distinguish itself by using specific materials, offering lower prices, creating exceptionally high-quality shoes or having outstanding customer service.

Ask yourself:

• Who does my product or service help?
• What problem am I solving?
• How much will others pay for this product or service?
• Have other businesses tried this idea before? Were they successful? What can I learn from their mistakes?
• How will I distinguish myself from the competition?

2. Assess the market

3. Create a business plan
A business plan is like a roadmap for your company. It has an overview of your company, the products or services you offer and your plan for the business in the coming years.

You'll use this research as you describe your business's goals, how you will launch and run your company and how much money you expect to make. The business plan will also tell the story of why your company started, how you plan to make a difference with your product and exactly what your product is and includes. Remember that mapping out these details now can help guide every decision you make.

Creating a business plan is an important step that can help you flesh out your idea. Having a clear business plan can also be a requirement when you apply for a small business loan or line of credit.

4. Raise money
Many businesses will require an initial investment, or startup funding, to buy equipment, purchase supplies, hire employees, rent a space, pay for licences and cover any other business expenses that pop up.

Small business owners might be able to choose from different sources of funding, including:

• Self-funding. Using your savings or income from another job, or taking out a personal loan to pay for business expenses.
• Friends and family. Asking friends or family members to invest in your business. They might offer you a loan and you will need to make an agreement to pay it back.
• Loans. Taking out a small business loan from a financial institution. You many need to have good credit, a solid business plan and some form of business or personal income to qualify for a loan. If you are unable to qualify for a loan on your own, consider finding a co-signer who agrees to be jointly responsible for the debt with you and who will help repay the debt if you are unable to do so.
• Investors. Raising money from angel investors or venture capitalist funds. Venture capital firms make direct investments in young companies in exchange for equity, or partial ownership, in the business. Angel investors will also invest in new businesses — often in exchange for equity.
• Seller financing. If you're buying an established business, the seller may offer to finance the purchase and lend you the money. The original owner of the business loans money to the individual who is buying their company. This helps the new owner finance their ownership in a new company over a longer period of time. Then the buyer repays the loan according to agreed-upon terms.
• Crowdfunding. Raising money from a large number of people who will donate their contribution and receive a reward, like a pre-order for your product or a visit to the business headquarters for a day.

You'll have to weigh the pros and cons of each option, such as whether you want to retain full ownership of the company while repaying a loan, or give up some control in exchange for an investment in your idea.

5. Register the business
Once you've determined that your idea can be successful and you've raised money to start your business, you'll need to go through the process of legally creating and registering your business.

In some cases, this step might come before raising money. Or, you might raise a little money, legally form your business, and then look for additional funding.

• Decide on a business structure. Forming a business entity can offer business owners tax advantages, legal protections against creditors, and may be a requirement for obtaining some types of business financing.
• Choose a business name. Make sure your business name reflects your business activity and isn't owned by someone else. You may also want to check whether a website address (for example, www.practicalbusinessskills.com) and social media account names are available for the business name.
• Register your business. You may need to register your business with the regional and national governments. You may also need to register with your local government office.
• Research your tax obligations. You may need to procure regional or national tax identification numbers for your business. Visit your regional and national government websites to access the forms needed to request your taxpayer identification numbers. 
  
• Obtain licenses and permits. Depending on your type of business and where you set up shop, you may need to get local and national licenses or permits. A small business development center might be able to offer you free guidance.

Once you legally form your business and get all the required licenses and permits, you can open shop and start selling your products and services. You've done it. You're officially a business owner.

Next, you'll need to figure out how to run a successful business and attract customers.