Setting up a business: a step-by-step guide

I present you the complete guide to start a business, a summary of the articles that I have published in the last weeks in the blog about the most important aspects and the processes that you need to know if you want to know how to start a business. This guide takes one by one the steps analyzed, with a brief summary of each point and a link to the detailed article in the title of the section. I hope it can be very helpful to you.

1º- Finding the idea to start a business

First you have to know that an idea is not worth anything. What matters is the implementation, that is to say how it is put into practice, something that depends mainly on the team in charge of the project.

A good idea has to respond to a real need, and provide this little extra thing that a customer is willing to pay. In other words, that it has a potential for profitability.

It is highly recommended that your idea fits in with what you know how to do (to be effective and innovative) and that it is something that you like (I would even say more, that you are passionate about), because you are going to spend a lot of time working on it.

2º- Search for entrepreneurial partners 

Or how to start a business in good company. You have every right to want to start a business alone, but finding partners has many advantages, especially to complete your profile in aspects that you do not control (management or commercial facet, technical facet, etc.)

If you choose to work in a team, be careful to look for people who share your business objectives, your values and in whom you can trust. And don’t think that friends are always good partners. The professional environment is governed by other priorities.

3º- The business model 

The design of your company’s business model is a fundamental stage. It’s about turning your idea into a process that generates revenue and profits, in other words: how you create value.

I recommend you to read the detailed article, in which I give you some definitions of the concept, I talk about the Business Model Canvas (so fashionable lately), I insist on the most important elements of the design of your model and I give you some examples of successful systems.

4º- How to get funding 

The initial investment is usually one of the main brakes when you want to start a business. Getting financing can be a bit complicated, and to help you, I have prepared an article that details the different models (internal financing, debt financing, equity financing or grants and donations) as well as the main actors that can provide money (entrepreneur, friends and family, crowdfunding, commercial banking, public banking and guarantee companies, venture capital firms, business angels).

5º- How to convince an investor or a bank 

Knowing how to set up a company has a lot to do with learning how to “sell” your project to others. If the previous article explains where you can go to find the money needed to finance your project, in this one I make some recommendations to succeed in your applications.

I explain the importance of preparing a business plan to have clear all aspects of your project. It is also essential that you take care of the form as well as the content, giving a professional image at all times and speaking in the present better than in the conditional. Another point in favor is that you invest your own money, even if you have little.

I also detail the differences between talking to a banker (who only lends you money and wants to make sure you will pay back the principal and pay the interest) and talking to an investor, whose objective is to maximize the return on his investment. In the latter case, you will have to be very careful from the beginning about the conditions of the collaboration with your capitalist partner.

6º- How to get clients 

In reality, and although I have put it in the sixth section of the guide, getting customers is what comes immediately after having defined the idea and the business model. Having convinced a few consumers to buy your product or service is the best weapon to convince potential investors.

In this article I will insist on the importance of being patient and persistent, and of taking everything as a game, with some techniques that I will detail. When you have caught your prey, you will still have to convince them, and you will need some of the advice I have prepared for you.

Finally, I think it is essential that you organize a follow-up of the effectiveness of your business activity. A common mistake is to spend a lot of energy on methods that don’t work, when a few adjustments can totally change your results.

7º- Self-employed or society? The choice of legal form 

In Spain, the future entrepreneur faces sooner or later the doubt of starting as an individual entrepreneur (self-employed) or setting up a company. I have prepared an article that reviews the advantages and disadvantages of each legal form according to various criteria: administrative simplicity, limited liability, tax advantages and the aspect of the transfer of capital.

As you can imagine, there is no fixed answer. Depending on the type of business, one form or the other will suit you better.

8º- Choose the name of the company 

For some businesses, it is a fundamental choice, for others, it has a more limited importance but the name of your company is usually the first thing that your future clients and the rest of your business partners see, and therefore it is always wise to stop for a while to reflect on what you are going to call your company.

You will want to find a short name, easy to remember, positive, if possible to reveal what your value proposition is and not be confused with other brands or have strange meanings in other languages.

In the article we tell you in detail about several clues to find a good name for your company.

9º- Hiring an employee 

In my opinion, hiring the first employee is one of the most significant and enriching moments in the process of setting up a business, as well as closing the first sale or making the first profit.

In this article I detail how to choose the right person for the right position, how to measure the profitability of a recruitment, and I explain both the various administrative steps you have to take as well as the benefits you can benefit from.

10º- Finding a location 

Maybe your business is open to the public, or maybe you can perfectly work from home. In either case, you’ll have to consider the location of your workplace.

I will give you some recommendations depending on the type of your business (for example, if you have a store, location is a key factor), and I will also give you some hints regarding the administrative aspects (the famous opening license).

The conclusion is a small analysis of the different types of owners you may come across when negotiating a rent for your premises.

11º- How to find suppliers 

You would be very wrong if you simply thought that with the entrepreneurial partners, the customers and the employees you have defined the most important actors to make a business. Your suppliers are also very significant third parties, and some of them become strategic, so you have to take special care in choosing them.

I explain you where you can find these partners, and also give you some criteria to compare the different companies that can attract your attention. Price is not everything. When you have found someone to work with, and before you sign, it will be worthwhile to review some important aspects.

12º- The most common mistakes made by entrepreneurs 

Before launching yourself, I recommend that you go over this list of very common mistakes to know how to start a business avoiding falling into the most known traps. Knowing these common mistakes will give you more options to succeed. Because I assure you that business life will face you with many more difficulties that do not appear on the list.

Things like starting a business in a sector where you have no experience, falling in love with your idea, wanting to start big, losing focus, not planning or not being reactive can lead to the failure of a project that might otherwise have worked. I have listed up to 16 common mistakes.

13º- Reasons for setting up a business 

It could have been the first article in the guide, but I wanted to put it towards the end as an interesting reflection on your motivations for entrepreneurship. Some reasons make sense and others are big mistakes. I recommend you read this article to make sure you are really clear about what you want to achieve.

14º- You have set up your business. Now what?

If you have passed all the steps detailed in this guide, it means that you have a company in order. But that was just the beginning, the easy part of the adventure. Now you have to consolidate your project.

Keep looking for customers, keep the focus, build your company’s image day by day, learn to rest and get perspective, measure your results, surround yourself with positive people and other entrepreneurs, look for systems to automate tasks and above all, always keep the customer experience at the heart of all your decisions.

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