How to Start a Small Business in 10 Steps

• What is a small business?
• How much does it cost to start a small business?
• How to start a small business in 10 steps
• What do you need to start a small business?
• Start small — but think big

Small businesses are generally defined by the U.S. Small Business Administration (SBA) as independent operations having fewer than 200 employees. And the majority of small businesses in the United States have fewer than five employees, according to the U.S. Census Bureau .

But the number — or lack — of employees doesn’t necessarily define a “small business.” A business’s size can also be determined by the number of sales, the range of individual business locations, and other factors.

Along with size requirements, the SBA considers a company to be small if it’s:

• For-profit
• Independently owned and operated
• Not dominant in its field
• Physically located and operated in the U.S. (or a U.S. territory)

If your company meets the SBA’s definition of a small business, many government programs offer resources and local assistance for you to turn your dreams into reality.

A sole proprietor working from home is going to have very different startup costs than a Silicon Valley startup flush with venture capital funds. But it doesn’t matter if you have $1,000 or $1 million to launch your small business — you’ll need to have a budget.

Are you moving the clutter out of your garage to make room for a desk? Or are you going to hire an architect to remodel a warehouse space in a trendy neighborhood? Obviously, both businesses are going to have wildly different expenses.

Think about your budget and what you can afford to get started. And it’s good to assume that unexpected expenses will pop up along the way — especially in your first year of business.

If you don’t do basic market research before you launch your business, you may be down for the count before you even get started. Ask neighbors, friends, and even your barista if they would be interested in your product or service — and ask how much they’d be willing to pay for it.

Conduct competitor research, local and global searches, and even offer surveys to consumers to see what the need versus want ratio is.

It's time to form a plan. A business plan is a strategic document that outlines your vision, objectives, service or product offerings, financial goals, and how you achieve them. Start by answering the three most crucial questions that act as the foundation for your business:

• What's your mission?
• What’s your vision?
• Who is your ideal customer?
• How can you make money?

To organize your ideas, download and fill out a business plan template. A well-written business plan provides clarity, confirms the math, and helps you establish goals so your business has the best chance of success.

Finding the perfect brand name is a vital step in launching a new business. But hiring a professional naming company doesn’t come cheap — it can cost as much as $100,000 , according to Fast Company.

If that’s outside your budget, there are countless AI-powered business name generators available online, and Fiverr has entrepreneurs who will help brainstorm business names for three figures or less.

Take a look at the taxes, zoning laws, and regulations in your location. You may find that operating your business in a different location could offer financial advantages. Review the fees, costs, and tax benefits of each state to see which location makes the most sense for your business. A strategic move may put you ahead of the game before you even open the doors.

Startup costs discourage many would-be entrepreneurs, but the reality is that many successful businesses got started with little more than a vision, discipline, and hard work.

As your business grows, you'll likely face more expenses, so factor those in. Here are some funding options worth considering:

• Self-funding: Starting small with your savings and bootstrapping until you're ready for the next move will ensure you maintain ownership.
• Crowdfunding: Communities power SMBs, and if you're keen to get people to fund your idea, exploring crowdfunding tools might be a great start.
• Angel investors and venture capitalists: Investors bring in capital, expertise, and a network many SMBs can tap into. They can boost your credibility in the market and might participate in future funding rounds or help attract additional investors.
• Small business loans: If you're not keen on attracting external investors, consider financing options traditional banks, SBA-approved lenders or lending institutions offer.
• Grants and government programs: The SBA offers grant programs for research and development and community organizations for veteran-owned businesses and tech and innovation research. You have additional resources if your business falls into one of these categories.

Register your business in the state where it was formed — and make sure that you’re set up to pay state income and unemployment tax. Review whether your local municipality requires filing for a license or permit to operate your business.

To satisfy Uncle Sam, apply for an EIN from the IRS . Confirm that no one else is using your business name by contacting your state filing office or online database. Some business structures require using a doing business as (DBA) name, and you may be required to open a business bank account.

Once you have a terrific name for your company locked down, you’ll want to develop a marketing strategy and create an online presence for your business. Be consistent on your social media channels, ideally creating accounts on the channels — meeting them online where they are.

Develop a website that’s intuitive and filled with all the information your customers need. Your marketing may also include advertising campaigns and public relations.

Brands use social media to pay attention to customers and their needs. Platforms such as X (formerly known as Twitter), Instagram, LinkedIn, and TikTok help brands adopt a social-first mindset and execute social monitoring and social selling. Analyze your target audience to develop a consistent social media strategy.

Depending on your business, you could introduce loyalty programs, road shows, cold-calling, advertisements, networking events, out-of-home advertising on billboards, signage, etc. Did you know having a consistent loyalty program will turn your customers into your brand advocates?

Our State of Marketing Report stated that 68% of marketers had a defined artificial intelligence (AI) strategy. AI makes a marketer's life more efficient, whether creating content or running multiple campaigns. You can use AI tools to brainstorm, generate ideas, develop campaigns, and scale faster. Here’s how AI can help your small business:

• Improved marketing: AI can make a real difference in various aspects of marketing, such as content creation, email campaign optimization, and ad targeting.
• More productivity: You can focus on strategic and creative work because AI agents automates manual and repetitive tasks.
• Cost-effective solutions: By doing routine tasks, AI reduces additional costs and effort. Plus, cloud-based AI solutions eliminate the investments in hardware and software.
• Personalized customer service: AI delivers 24/7 support through chatbots, enabling faster response times and prompt support for common inquiries. Build one with Agentforce.

To enhance your marketing efforts and grow your small business, try customer relationship management (CRM) for Small Business. This will be your solution for storing and managing prospect and customer information such as contact information, accounts, leads, and sales opportunities — all in one single source of truth.

With Salesforce’s Starter Suite, you can start in minutes and easily manage your marketing, sales, and customer service as your business scales.

Let AI assistants simplify your customer experience

Having an AI assistant, or AI agent, can be the tool you use to stay ahead of your competitors. Agentforce is an AI solution you can customize based on your industry, business needs, and demand. Need an agent to handle your holiday season rush? An agent can interact with potential clients, run marketing campaigns, analyze surveys, resolve customer queries, and deliver personalized recommendations.

Unlike humans, agents are up 24/7 and can help you with time-consuming tasks that often contribute to small business failure. By automating routine functions, AI agents help small businesses operate more efficiently, reduce human error, and potentially cut costs.

Congratulations: You’ve done all the hard work and you’re ready to introduce your product to the world.

Did you launch IRL or online? You can open up an ecommerce store, also known as an online store, as a digital platform that allows your customers to browse, select, and buy your products or services online. It serves as a virtual storefront for businesses, with a wider reach and the ability to sell globally, 24 hours a day, seven days a week.

Ecommerce stores offer a range of products and services, giving your customers more flexibility to find what they’re looking for. And, ecommerce stores typically offer a variety of payment options and secure checkout processes, gaining customer trust and satisfaction.

The key is to provide your customers with convenience, choice, and a shopping experience that is both efficient and enjoyable. First, you have to understand the fundamentals of an ecommerce store before you open up shop.

Make sure to announce your launch on social media — and consider throwing a media-friendly bash to celebrate.

When you use CRM software, you can keep track and personalize support for all your customers. And happy customers are good for business — 80% of them say the experience a company provides is just as important as its products or services.

You'll need a business name, location or presence to start.

Choosing where to conduct business is one of the most important decisions you can make for your small business. While staying close to home may be your first instinct, a change of venue may prove to be financially advantageous.

If you can't be local, you can always open a small business commerce storefront and reach customers on a global scale.

For tax purposes and protection of personal assets, you need to choose a business structure that offers the right balance of legal protections and benefits. Common business structures include sole proprietorship, partnership, limited liability company (LLC), corporation, and cooperative.

Get your Employer Identification Number (EIN) , which works like a personal Social Security number, but for your business. You need an EIN to pay state and federal taxes for your company.

If you want personal liability protection, legal protection, and tax benefits for your company, you’ll need to register your business with state and local governments.

Whether your business needs to apply — and pay for — licenses and permits depends on your business activities, location, and government rules. Review regulations from city, state, and federal agencies.

Opening up a bank account exclusively for business use will help keep your personal finances separate, making life easier at tax time. There are several banks that will allow you to open a business checking account with a zero balance, but traditionally banks will require an opening deposit of anywhere from $1,000 to $25,000.

Even if you open a business checking account with a zero balance, you’re going to want to have some funds to cover basic operating expenses. The SBA offers guidance on obtaining funding for your small business, including loans, grants, and investors.

Starting a new business may feel like a gamble, but business insurance will help you cover your bet. The right insurance policy will help protect you against accidents, natural disasters, and lawsuits.

Many small businesses exist with just a presence on social media, but having a professionally designed website adds legitimacy to your business.

A well-designed logo can make or break a business. The Nike “swoosh” was created by a graphic design student — and the $35 Nike initially spent paid for itself many times over.

A CRM platform keeps your customer data organized and provides the foundation to build connected customer experiences (that can be made even better through artificial intelligence). Starting with a suite of sales, service, marketing, and commerce tools is easy.

Like graphic design, marketing expenses are costs that many small business owners initially want to avoid. But strategically investing in a marketing campaign can be a boon for a small business that wants to make noise in a crowded marketplace.

For most small businesses starting out, hiring an assistant to perform administrative and clerical duties is something of a luxury. If your budget is tight, consider an AI agent.

While it is possible to keep track of your financial records on a traditional paper ledger, modern invoice and billing software makes the process much, much easier.

Once your business grows to a certain size, it’s time to create a human resources (HR) department — or, at least, to hire an HR professional. This professional can focus on things such as labor law compliance, employee recruitment, employee engagement and development, and compensation and benefits management while you manage your business.