Don't miss a beat: Your step-by-step business startup checklist

Don't miss a beat: Your step-by-step business startup checklist

Wil Chan
By Wil Chan
Dec 14, 2023
9 min read

Small businesses — generally businesses with less than 500 employees — create two-thirds of new jobs in the U.S. According to the U.S. Small Business Administration (SBA), small businesses create 44% of all economic activity in the U.S.

Maybe you’re thinking of joining their ranks as a first-time business owner. We know these first steps into owning your own business can be both exhilarating and confusing, so we created a simple business startup checklist for aspiring entrepreneurs.

Quick jumps:

  1. Do your research
  2. Estimate startup costs
  3. Create a business plan
  4. Consider legal and tax matters
  5. Set up a financial plan
  6. Choose your insurance coverage
  7. Create marketing and advertising strategies
  8. Celebrate and evaluate your first year of business

This post is a snapshot of a more extensive chapter in NEXT’s Small Business Guide. In the complete guide, the entire small business checklist contains more tips, details and resources. There are also survey results and advice from experienced business owners and service providers. It’s completely free, so download it today.

1. Do your research

Before you launch your business, you’ll want to determine if it is viable: does it have the potential to become successful? After all, you wouldn’t want to pour your heart and efforts into a business idea with very little chance of profit.

One of the first checklist items in getting your business off the ground is conducting market research. You’ll want to find out information about:

  • Who your potential customers are and what problems you’re going to solve for them
  • The preferences of these potential customers. How will they find you, and how do they like to communicate? What do they like and dislike?
  • Who are your competitors, and what are their strengths and weaknesses
  • What is it like to start a business in your area? What are the steps and regulations?
  • The market in your area. Is there a demand for your type of business or is the market saturated with similar products and services?

TIP: Hit the books. Before starting your research, consider taking a small business class online or in person through your local community college or the SBA. These classes are designed to help first-time entrepreneurs navigate an unfamiliar path.

2. Estimate startup costs

At this point, you’ll also want to think about startup costs and how you’ll find funding.

First, you’ll want to estimate the costs to get your business off the ground. Consider costs such as:

  • Equipment
  • Business location or office space
  • Permits, licenses and fees
  • Business insurance
  • Advertising and promotions
  • Consultants such as accountants and lawyers

TIP: The SBA provides a handy worksheet to help calculate your costs.

You’ll also want to think about how you’ll finance your launch. Will you get a business loan from a bank or turn to private lenders? Will you borrow from the SBA? Will you have a combination of both and include your own savings?

Besides funding your launch, you’ll also want to consider credit and loan repayment and any contingencies. We’ll get into the financial side a little later, but it’s wise to consider this when estimating costs.

3. Create a business plan

The next item to check off: make a business plan. Your business plan can be simple or complex, but essentially it’s a document that outlines your financial objectives and how you will achieve them.

Typically, a business plan includes:

  • Executive summary
  • Company description
  • Products and services
  • Market analysis
  • Financial projections
  • Hiring employees
  • Marketing plan

A business plan will guide you in operating your small business and help you create strategies for growing your sales and customer base. It doesn’t need to be long; it’s a way for you to jot down your plans.

Since a business plan explains how you will reach your goals, you can share it with potential investors to help secure your business financing. It can also help you attract partners who can help grow your business.

TIP: Seek out existing resources. Creating a business plan may sound intimidating, but there are plenty of resources to guide you. The SBA offers a free course with videos to show you how and what you may want to include in it. There are also numerous templates available online that can get you started.

4. Consider legal and tax matters

While not much fun, taking care of legal requirements and setting up your tax structure is an important part of your small business checklist.

Choose a legal structure

First, you’ll need to choose a business structure for your company, such as a sole proprietorship, partnership, limited liability company (LLC), partnership, S-corporation or C-corporation. Choosing your structure determines how you’ll pay taxes and can protect you from personal liability for any debts your company may incur.

Acquire licenses and permits

Next, you should get the necessary business licenses or permits from federal and state agencies. The requirements and fees vary depending on your business, location and government rules.

Check with your local SBA branch office on what specific licenses or permits you need to acquire. These might include:

  • Business license. Nearly all businesses in the United States need a business license to operate.
  • Employer Identification Number (EIN). Sole proprietors and some single-member LLCs aren’t required to have an EIN. Partnerships, corporations and some LLCs must obtain an EIN from the IRS for tax purposes.
  • Industry license and permits. Depending on your type of business, you may need to get a specialized license or permit to operate your business. For instance, construction workers are required to be licensed for their respective trades.

TIP: Consult with an expert. A lawyer or CPA can be crucial in helping you form and maintain your business. A lawyer can discuss the type of corporation best for you and how to protect and set up your business. Consult with CPAs on tax matters and navigating confusing IRS regulations. They can walk you through state and local tax laws and help with financial planning.

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5. Set up a financial plan

Your financial plan is one of the most essential items on your business startup checklist. With a plan, paying bills and getting paid will be easier. Consider looking into banks that offer business bank accounts with digital services and apps, branches close to you and low account fees.

Start building business credit

You should also start establishing business credit. Just like a personal credit score you’ve built over time, you’ll have to build a business credit score if you’re a first-time entrepreneur.

Your business credit score determines future loan interest rates, repayment terms and how much money you’ll receive.

While each lender has different qualifications, typically, you’ll need to provide your past revenue, expenses, bills and payroll when you apply for a loan or business credit card.

TIP: Ask for a net 30-day account. First-time business owners can build their credit score through their vendors and suppliers by asking for net terms such as 30 days. It’s important to manage your cash flow and a more extended period to pay vendors and suppliers.

Setup an accounting system

You’ll need to know how your money is moving to do business effectively. Accounting software can help you with your bookkeeping needs, including collecting payments, paying bills, managing payroll, tracking expenses and more.

A solid accounting system makes filing business taxes much easier; it’s better to plan than set things up ad hoc.

6. Choose your insurance coverage

Good business insurance is a must whether you are self-employed or have a team of employees. But it’s not always easy to understand what you need coverage for: 90% of small business owners aren’t confident their business is adequately insured.

The right coverage protects you from unexpected costs related to running your business. From accidents to property damage to lawsuits, insurance can help protect you from shelling out tens or even hundreds of thousands of dollars after a sudden mishap on the job.

Depending on your business, you’ll need different coverages to offset your risks. The four most common kinds of insurance for new small businesses are:

General Liability

This broad coverage protects against many workplace accidents, including property damage, physical injury and medical or legal expenses. General liability coverage is the most basic type of insurance that most businesses need.

Professional Liability

Also known as Errors and Omissions (E&O), this insurance can cover accusations of professional mistakes, negligence and misrepresentation. It’s important if you deal with expensive property (such as houses or cars) or financial matters, but professional liability insurance can also cover you if you have technical difficulties and can’t complete a job.

Workers’ Compensation

While general liability covers third parties, workers’ comp covers employees getting hurt or ill on the job. This insurance helps cover their medical expenses and lost salary while protecting you, the employer, from being sued for negligence. In many states, workers’ compensation insurance is mandatory for businesses with even one employee.

Commercial Property

Commercial property coverage can protect small business owners who rely on equipment, inventory or furniture to run their business. It can help protect the physical assets you need for business operations, including your gear, goods and the building itself. This coverage can also help protect you against losing business income and related expenses if you temporarily close due to a covered event like fire or water damage.

TIP: Shop around for insurance. NEXT specializes in affordable coverage for small businesses, making insurance easy to understand and simple to manage.

7. Create marketing and advertising strategies

We know you’re eager to launch your business, but don’t forget to complete one more important item on your checklist: marketing and advertising. If you create a strategic marketing plan before you launch, you could have customers knocking on your door as soon as you open rather than chasing them.

Today, even businesses that mostly work “offline” need a good marketing presence online. Whether it’s through your own website, social media channels or Yelp reviews, the internet is how many potential customers will find and engage with your business.

Build an online presence with this checklist:

  • Website. Creating a business website can be simple. If you register your business name as a domain name, you can help your target audience find your business and get in contact. Platforms like GoDaddy make it easy by providing tools and templates to get your business up and running.
  • Google My Business. Make sure customers can find your business and is searchable. Here’s how.
  • Yelp. Set up your business page to engage with customers and attract new ones.
  • Social media channels. Determine which social platforms best connect you to your customers. For instance, if you offer financial services or are in real estate, maybe LinkedIn is where you grow your network. On the other hand, if you work in food services, maybe Instagram or Facebook is where your audience is.
  • Email marketing. Create a company email to send newsletters and allow customers to engage with you directly. Here’s how to build an email list.

TIP: Consistency is key to your marketing strategy. Building a following and customer base is a slow and steady process. It may be tempting to stop marketing and advertising efforts when your business is doing well or double your efforts when it’s slow, but a continuous pace will keep your momentum going. Figure out a cadence you’re willing to commit to — maybe it’s a weekly post on social media — and stick with it.

8. Celebrate and evaluate your first year of business

Starting your own business is incredibly rewarding. After all of your hard work, it’s time to take a step back to celebrate your accomplishments. Many business owners choose to do the following to commemorate their special anniversary:

  • Create an event such as a giveaway or contest
  • Reward loyal customers with a gift or discount
  • Volunteer within the community
  • Thank your partners and customers
  • Treat your staff to something special
  • Sponsor an event
  • Launch a new product or service.

TIP: Look to the future. The one-year mark is a great time to evaluate what went well for your small business, areas where you can improve and the next steps for growth. You know so much more now than when you started, so set some new goals for what you want to achieve.

Get NEXT’s full small business startup checklist

If you want full checklist details, including more tips and resources, download the NEXT Insurance Small Business Guide. Our guide is packed with first-hand advice from small business owners and new survey data from over 500 small business owners across industries.

NEXT is helping small business owners thrive by delivering a painless and seamless experience for getting business insurance online. You can get a quote, review options and purchase coverage in less than 10 minutes.

Get an instant quote today.

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Wil Chan
About the author

Wil Chan is a content writer at NEXT and has been a professional writer for more than ten years. His work has been featured in publications including Forbes and Greatist. He has run a freelance business since 2016 and feels passionate about helping self-employed people in all industries succeed.

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