20 Steps To Starting A Business: The Home Business Startup Checklist

Starting a business can be a scary, intimidating affair if you have never done it before.  The most common question I am asked is, “Where do I start?”  That is why in my very first podcast episode, I talk about the Business Startup Checklist.  It is a list of steps first-time business owners can use to get their new venture off the ground.

It has been a while since I looked at this checklist, so I recently updated it and included some helpful links to take you right to the sources when I reference them.  In the spirit of full disclosure, some of the links (like my recommended website host) are affiliate links, where I get paid if  you make a purchase.

1. Conduct a personal financial checkup. (download)

You need to know where you stand with your finances so you can start your business with a clear understanding of what it will take to support you and your family.  If you are going to start a full-time business, I recommend having enough money in savings for at least 6 months worth of expenses.

2. Do your research: Define your target market and your competition.   Find out if your  market wants what you offer, and if your competition is giving it to them.

Whether your business will be on-line or off, you want to do your homework before you get too deep into things.  You want to know who the biggest players are,  the size of your market (not anyone who might buy, but how many are likely to buy), etc.  Competition is a good thing. It means there is a market there.  Make sure you can differentiate yourself and not just by being cheaper.  Competing solely on price is a recipe for disaster.

3. Pick a name & check if it is available to register in your state and as a web domain on-line.

I have gone into some specifics about naming your business before.

4. Buy the domain name. I recommend GoDaddy.com.

If this will be your only website, your hosting plan will include registering your domain name.  If  you will have a number of websites, then register all of your names with one company, and point the domain to your webhost.

5. Sign up for web hosting.  My recommendation

Without getting too technical, it can take up to 72 hours for your domain name (website address) to point to your website.  It usually only takes a few hours but I have had it take a couple days before.  Once you pick your name and find it is available (or a domain name close enough to your business name) buy it and get your hosting account set up.  Even if it is just a parked page that says Under Construction, it is best to have this taken care of early.

6. Select your office space or work area.

Whether you are working from home, an executive office suite or a stand-alone office, you need to plan where the best place to set up shop is.  Obviously this is more complicated for a retail business that needs a store-front in a prime location than a service business you can run from your home.  Do you have young kids at home?  You better plan for childcare and a place to go when you need to talk on the phone without background noise.

7. Get a mailbox that gives you a physical address (e.g. the UPS Store.)

Mailbox services like the UPS store will give you a physical address (not a P.O. box) and provide services like signing for packages.  This is important if you are working from home.

8. Sign up for a virtual phone/fax number.

These virtual services range in benefits and features and are usually  a fraction of the cost of adding land-lines to your home phone or setting up business lines.  I use a virtual receptionist service that gives me a toll-free number that I can send to voicemail or forward to my cell phone or land line.  You can schedule it to forward to a certain number or play a certain message depending on the time of day or day of the week.  I love the flexibility it gives me and I only have to give people one number. It also acts as a fax.  I get faxes as PDFs and Voicemails as WAV files in my email inbox.

For a little less money a month, you can get a virtual phone/fax number that just goes to voicemail and accepts faxes.  It doesn’t have the forwarding flexibility of the virtual receptionist but it does the job and gets you a dedicated business line cheap.

9. Assemble your team of advisors; i.e. attorney, bookkeeper and CPA, if appropriate.

I have learned the hard way not to try to do everything myself.  DIY works for a lot of things, but there are some things where it is best to use a professional.  The best way to find these professionals is to ask around.  You want people familiar with your industry if possible.  I always try to get recommendations from people I trust, that have had good experiences with accountants, lawyers, etc.  If you can’t get recommendations, go to networking functions like Chamber of Commerce meetings to connect with people face to face.

10. Decide which business entity is right for you: LLC, partnership  or corporation.

I dedicated an episode of the podcast to this subject and there is a great discussion in the comments section that goes into even greater detail.

11. File the paperwork to form your company (business entity).

Use the company I recommend to file the paperwork for you, or do it yourself.  With a little research and legwork you can get what you need at your Secretary of State’s office.  It will save you about $150.

12. If you formed an LLC with partners, create your Operating Agreement.

Not as important for single member LLCs but if you have partners, I highly recommend writing an Operating Agreement.  You may need help with this.   Here is a good article about creating an Operating Agreement.  Here is a source for professional help.  You can find free Operating Agreement templates on-line.

13. Get Your Employer Identification Number (EIN) also known as a Federal Tax Identification Number.

Go to the IRS website and apply on-line for your EIN.  It only takes a few minutes and you can get the number right away.  You need an employer identification number (also called the Federal Tax Identification number) to open a business bank account, file your tax returns and for some state licenses.

14. Open a business checking account, and get a credit card dedicated to the business.

You want to keep your personal and business finances separate.  Even if you are a sole-proprietor (when you do not file an LLC or corporation) you want to open a separate bank account and use a dedicated credit card.  Even though these will be a personal account, keeping everything separate will save you a lot of accounting and legal headaches.

15. Get any licenses, permits, etc.,  from the state, county  or city, that you may need, and check if you need a license to run a business from your home.

The laws and regulations are different in every state and vary greatly by industry.  Your Secretary of State’s office or local SCORE chapter are a great resource to see if you need any special licenses to open your business.

16. Set up your books.  It is VERY important to keep your business records separate from your personal records and that you never mix your personal and business funds.

Most people use QuickBooks for this, but you may want to check with your accountant to see if they have a specific system or software they would like you to use.  You may also want to consider an on-line solution for professional invoicing.

17. Get your website up.

Whether you do it yourself or hire a professional to create your website, it is easier and cheaper than ever to have a great-looking interactive presence on the internet.  I have talked about and recommend using WordPress to create and manage your website.

18. Get business cards.

Not much to say here, and less important if your business is solely on the internet, but if you are going to do any face to face networking (and YOU SHOULD) you need business cards. Here is the company I use – Good quality & cheap.

19. Identify an appropriate networking group, and attend your first function.

Time to use those business cards you just made.  You will seriously increase your chances for success if you get out there and meet some people.  You not only need to meet potential customers, but other business owners like yourself.  I have had very successful businesses that existed solely on referrals. A great place to start is to check your local paper for Chamber of Commerce events.  Another great resource to find networking groups is Meetup.comMeetup.com

20. Prepare a written business plan complete with financial statements.

I am not going to stop talking about this.  You need to write a business plan.  It does not have to be a formal business plan, but you do need to write it down.  Competitive analysis, market analysis, financial planning and forecasting are skills you need.  Whether you use the Business Plan Templates I give away , use software like Business Plan Pro, or buy a book, you really need to do it.

So there are the 20 steps you can take to get your business started.  They are not “easy steps” or “secret steps.”  They are not even everything you need to do to start a business.  They will get you well on your way though.

Download a PDF of the HomeStartupss Startup Checklist

What do you think?  Is there anything I left out?