How To Start a Small Business in 2025: Step-by-Step Guide for Beginners

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Starting a small business can seem less daunting when you break the process into smaller, more achievable steps. If you’re wondering how to start a small business, this 10-step guide can help you move forward with clarity and confidence.

1. Validate Your Business Idea

Start with market research to better understand your target audience, uncover gaps in the market and build a foundation for a successful business. This step can help you identify the right business for your skill set and interests.

Consider whether your idea could eventually grow into a full-time venture or start as a side hustle.

As you develop your idea, think about the price you’ll charge and whether your offer solves a real problem for your potential customers.

Pro Tip

The Small Business Administration (SBA) was established to support small-business owners and serves as a valuable resource for aspiring entrepreneurs. Contact your local office for additional help as you plan your business.

2. Choose a Business Model

As you start thinking about this step, consider the following questions:

• Do you plan to work as a lean startup or a traditional business?
• What products or services do you sell?
• Is your business digital, in-person or both?
• How will you earn a profit?

Be as thorough as possible to have a clear understanding of the capital and staffing requirements needed to launch and sustain your business.

You need a strong sense of your business model and marketing plan when applying for a small business loan or other forms of financing.

3. Write a Business Plan

A business plan, or executive summary, is a blueprint of where you want your small business to go. It should include information such as, but not limited to, the following:

• Company description
• Market analysis
• Organization and management
• Financial forecasts
• Marketing strategy, including advertising and social media

Good To Know

Your business plan will evolve over time — and that’s completely normal. Many online tools and platforms offer free templates and planning guides to help you stay organized as your business grows.

4. Pick a Business Name

Your business name should reflect your goals, whether you’re launching an online business, opening a shop in a specific business location or just claiming your own business identity.

Things to consider when naming your business include:

• Website domain availability
• Social media handle availability
• Uniqueness in your state
• Email marketing

5. Decide on a Business Structure

Your business structure can impact your company’s agility, financing or tax requirements and other factors. As you start your small business, you will find that the simplest legal structure is a sole proprietorship, in which you are personally responsible for all assets and liabilities.

Here are other common business structures:

• Limited Liability Company (LLC): A popular structure for small businesses, an LLC offers liability protection and pass-through taxation without the complexity of a corporation.
• Sole proprietorship: The easiest way to start a business — you’re the sole owner with no legal separation from the company. It’s simple but lacks liability protection.
• Partnership: A business owned by two or more people. Be clear on roles and profit splits. Liability protection is only available if you form a limited partnership (LP) or limited liability partnership (LLP).
• Corporation: A separate legal entity that offers strong liability protection and access to investors. It’s complex and requires more paperwork and compliance.

Keep In Mind

Starting a family business or partnership? Make sure everyone is aligned on goals, roles and finances before applying for loans or officially launching the company.

6. Apply for Licenses, Permits and an EIN

Before you open for business, make sure that you’ve obtained all the necessary licenses and permits. Your business could be subject to different federal and state requirements, including laws that apply to online transactions only.

Check with your local government agencies to make sure you’re applying for the correct business license and tax ID numbers before you operate legally.

Once your business is officially registered, you can apply for an employer identification number (EIN) from the IRS. This number makes filing your federal taxes, hiring employees and in some cases, opening a business bank account possible.

If you file as soon as you get registered, it will make paying your business taxes much easier. 

7. Open a Business Bank Account

Business bank accounts allow you to separate your personal and business finances — an important step when you’re starting a business.

Opening a business bank account comes with a slew of considerations of how you will run the day-to-day operations, transactions, payroll and finances of your business.

Make sure you complete this step before you hire any employees, so you can have a system in place before issues of payment and insurance arise.

8. Fund Your Business

Starting a business requires an investment of funds. If you do not have personal funds or seed money to start your business, then there are other options you can consider.

Here’s a quick overview of some of the most popular financing options:

• Angel investors: These are financial backers who invest their own funds into your business. 
• Equity crowdfunding: This is another financing alternative in which a group of people invests in your startup in exchange for equity in your business.
• Small business loan: You can work with the SBA or a private lender to get a loan for start-up costs. 
• Personal savings: Some business owners self-fund their endeavors with personal savings or gifts from family members.
• Business credit card: Some founders finance their businesses using a credit card, though this option should be weighed carefully against long-term interest costs.

9. Set Up Accounting and Operations

Strong operations are essential for business development and long-term success. Address your business needs from the start by using the right tools for managing cash flow, payroll and inventory.

Here’s a rundown of what you should consider:

• Bookkeeping
• Financial reporting
• Software
• Analysis 
• Sales projections
• Business insurance
• Customer service

 10. Build a Website and Market Your Business

Congratulations on making it to the final step! It’s time to build a website and market your business.

You can purchase a domain and establish an online presence, which will help legitimize your business. After that, it’s time to market your new offering. 

Consider creating social media accounts like TikTok, Instagram, Facebook or YouTube. You can also pay for advertising online or locally with a billboard or commercials. 

Additional Tips for Starting and Running a Small Business

Once you’ve covered the core steps to get your business off the ground, there are a few more things to consider — especially if you’re launching from home, working with a limited budget or focused on long-term success. These tips can help support your next steps.

Starting a Small Business From Home: What To Know

You can start a small business in your home, and it’s often easy to jump right in. Most virtual companies — like freelance services or online stores — don’t require licensing or insurance if you’re working solo from a computer. You might choose to add those protections, but they’re usually not a legal requirement.

Here are some of the most popular work-from-home business ideas:

• Freelance writing
• Social media management
• Real estate
• Graphic design
• Influencing
• Coaching
• Therapy
• Dropshipping
• Re-selling items

Planning Tip

There’s a difference between working remotely from your home and operating a business based out of your home. If you plan to run a daycare, tutoring center or other in-person service, you’ll likely need licenses, permits and insurance.

What To Know About Starting a Business With Little or No Money

It’s possible to start a business without money, especially if you choose a service-based model. For example, you don’t need much capital to start as a freelance writer, consultant or coach. You just need your skills, a way to market yourself and paying clients. 

Product-based or physical location businesses typically require funding up front. You’ll need to rent space, hire employees, purchase inventory — which may mean applying for a small business loan, pitching to investors or tapping into personal savings.

Examples of low- or no-cost businesses include:

• Cleaner
• Writer
• Consultant
• Coach
• Bookkeeper
• Handyman   

Tips for Running a Small Business Successfully

Starting a small business is one thing — running it is another. Success requires commitment, planning and the ability to adapt as you go. Here are a few tried-and-true strategies that can help:

• Create a strong business plan
• Hire reliable, skilled employees
• Make sure you have enough funding
• Find a mentor who believes in you
• Stay flexible with your pricing strategy
• Work with other local business owners 
• Stick to a thoughtful marketing strategy
• Set up the right legal protections 

Final Takeaway

Starting a new business is a huge undertaking. It’s an exciting time of preparing for the future, but it’s also overwhelming to make it all happen. The good news is that with the right preparation and planning, you can launch with confidence. No matter your goals or budget, understanding how to start a small business step by step can make the process much smoother and set you up for long-term success.

Allen Young and Caitlyn Moorhead contributed to the reporting for this article.

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