How to Start a Small Business: Starting a Small Business Checklist (2024 Guide)

What Do You Need to Start a Small Business 

Small businesses play a vital role in driving the U.S. economy, employing nearly half of the American workforce and contributing significantly to the nation's GDP. They represent 43.5% of America’s GDP and are integral to the economic ecosystem, collaborating with larger businesses as vendors, employees, partners, and customers.

Over the past two decades, small businesses have consistently accounted for approximately 40% of the United States' gross domestic output (GDP), translating to trillions of dollars of economic activity according to the US Chamber of Commerce.

Considering the significant size and influence of the small business market, aspiring entrepreneurs have ample opportunities to establish their own ventures and contribute to the economy. With the right idea, planning, and execution, individuals can embark on the journey of opening their small business, tapping into the vast potential of this thriving sector. Whether starting a traditional brick-and-mortar store, an online business, or a service-based enterprise, there are numerous pathways for entrepreneurs to enter the small business landscape and make their mark on the economy.

How to Start a Small Business: Your Complete Checklist

Your business may be small, but your ideas aren’t. This checklist will help you think through your business launch.

Choose your concept

Choosing a concept for your small business is a pivotal step that requires careful consideration of various factors, including your interests, skills, market demand, and competitive landscape. Here are some types of businesses you could consider:

• Retail Business: Retail businesses involve selling products directly to consumers through physical storefronts, online platforms, or both. You could explore options such as specialty boutiques, convenience stores, e-commerce stores, or franchise opportunities in industries like fashion, electronics, home goods, or health and wellness.
• Service-Based Business: Service-based businesses offer expertise, skills, or assistance to clients or customers in exchange for a fee. This could include professions such as consulting, coaching, tutoring, event planning, graphic design, digital marketing, or home services like cleaning, landscaping, or pet care.
• Food and Beverage Business: Food and beverage businesses involve preparing and selling food or drinks to consumers. Options include restaurants, cafes, food trucks, catering services, bakeries, juice bars, or specialty food shops like artisanal cheese shops or gourmet coffee roasters.
• Manufacturing Business: Manufacturing businesses involve producing goods or products from raw materials or components. This could include manufacturing clothing, furniture, artisanal crafts, beauty products, electronics, or specialty items like handmade jewelry or custom-made goods.
• Online Business: Online businesses operate entirely or primarily on the internet, offering products or services to customers worldwide. This could include e-commerce stores selling physical products, digital products like e-books or online courses, subscription-based services, or affiliate marketing.

When choosing a concept for your small business, it's essential to consider factors such as market demand, competition, scalability, profitability, and personal passion. Conduct thorough market research to identify gaps or opportunities in the market, assess the viability of your business idea, and determine its potential for success. Additionally, evaluate your own skills, interests, and resources to ensure alignment with the chosen business concept. By carefully evaluating these factors, you can select a business concept that not only meets market demand but also resonates with your strengths and passions, setting the stage for a successful small business venture.

Set up your business structure

In the U.S., you can choose between five business entities: Sole proprietorship, partnership, limited liability company (LLC), S Corporation, or C Corporation.

C Corporations are the Coca-Colas and Nikes of the world, but each of the other four are suitable for small businesses, depending on your specific situation. If you’re a sole owner of the business or are opening it with a partner, a sole proprietorship or partnership may make sense.

Many small businesses choose to file as an LLC because this entity gives owners legal protection and separates their personal assets from business assets, which ensures their personal assets are off-limits should the company ever be sued.

You can learn more about business structures here.

Write your small business plan

When you have the basic structure of your business in mind, it’s time to write a business plan. This document is the skeleton of how your business will function and communicates to potential investors and other stakeholders the key points of the business. It should include:

• Executive summary: This broad overview of your business will state its concept, purpose, mission statement, and give some insight into expected costs, operational plans, and marketing plans.

• Company overview: Here, you’ll lay out the practical details about your business, like the ownership structure, location if applicable, and key stakeholders.

• Industry analysis: Your small business may have a lot of competitors. It may not. Either way, it’s crucial to perform some industry analysis to understand general industry trends, local and national competition, and your target audience. No business can succeed if there simply isn’t demand for what you’re selling, and figuring that out takes some research. Whether you’re targeting an international customer base or you want to become the neighborhood grocer, it’s crucial to spend time online or in-person gathering data to support your business plan.

• Marketing plan: Over time, your marketing plan will change. Starting a business costs money, however, so you need to start making money back quickly by finding customers. The marketing plan you lay out in the business plan should outline general marketing strategies and branding guidelines, like taglines, your social media strategy, and different advertising channels you plan to use to build awareness and excitement for your small business.

• Operations plan: Every small business operates a little differently, which is why it’s important to have a thorough operations plan to help you (and other potential stakeholders) visualize how the business will function day-to-day. This may include any hiring needs, customer service policies, technology you’ll leverage, potential costs, and more details to communicate how your business will function.

Finances, sales forecasts, and operating expenses

Running a small business requires careful management of finances and resources to ensure profitability and sustainability. Here are key considerations for managing operating expenses, finances, and developing sales forecasts:

• Operating Expenses: Identify and track all operating expenses associated with running your small business, including rent, utilities, payroll, inventory, marketing, and administrative costs. Create a detailed budget that outlines projected expenses and revenue streams to guide your financial decisions.
• Managing Finances: Establish a system for managing finances effectively, including maintaining accurate accounting records, monitoring cash flow, and tracking expenses against budgeted amounts. Consider using accounting software or hiring a professional accountant to streamline financial management processes and ensure compliance with tax regulations.
• Cash Flow Management: Monitor cash flow regularly to ensure there is enough liquidity to cover operational expenses and unforeseen costs. Implement strategies to improve cash flow, such as negotiating favorable payment terms with suppliers, incentivizing early payments from customers, or securing a line of credit for short-term financing needs.
• Revenue Generation: Develop sales forecasts based on historical data, market trends, and anticipated changes in demand. Consider factors such as seasonality, economic conditions, and competitive landscape when projecting future sales volumes. Regularly review and adjust sales forecasts as necessary to reflect changing market conditions and business performance.
• Cost Control: Implement cost-saving measures to optimize operational efficiency and maximize profitability. This may include renegotiating contracts with suppliers, reducing unnecessary expenses, or finding creative ways to streamline processes and reduce waste.
• Investment and Growth: Allocate resources strategically to invest in areas that will drive growth and long-term success for your small business. This may involve investing in marketing and advertising campaigns to expand your customer base, upgrading technology and infrastructure to improve efficiency, or hiring additional staff to support business growth.

By effectively managing operating expenses, finances, and sales forecasts, you can position your small business for success and ensure its long-term viability in a competitive marketplace. Regular monitoring and strategic planning are essential to adapt to changing market conditions and capitalize on growth opportunities while maintaining financial stability.

Figure out funding

Small businesses often require external funding to start or grow their operations. Here are common options for securing funding:

• Bootstrap: Many small business owners use personal savings or assets to finance their ventures. Bootstrapping allows entrepreneurs to maintain full control over their businesses and avoid debt or equity obligations.
• Small Business Loans: Banks, credit unions, and online lenders offer small business loans tailored to the needs of entrepreneurs. These loans may be secured or unsecured and can be used for various purposes, such as purchasing inventory, equipment, or real estate, or covering operating expenses.
• Microloans: Microloans are small, short-term loans typically offered by nonprofit organizations, community development financial institutions (CDFIs), or online lenders. They are suitable for small businesses with limited credit history or those unable to qualify for traditional bank loans.
• SBA Loans: The U.S. Small Business Administration (SBA) offers several loan programs to help small businesses access financing. These include the 7(a) loan program, which provides funding for working capital, equipment purchases, or real estate, and the Microloan program, which offers small, short-term loans of up to $50,000.
• Grants: Government agencies, nonprofit organizations, and private foundations offer grants to support small businesses, particularly those engaged in research, innovation, or community development. Grants do not need to be repaid but often come with specific eligibility criteria and reporting requirements.
• Alternative Financing: Alternative financing options, such as invoice financing, merchant cash advances, or revenue-based financing, provide access to capital based on future revenue or receivables. These options may be suitable for businesses with irregular cash flow or limited collateral.

Each funding option has its pros and cons, and the best choice depends on factors such as the business's stage of development, funding needs, risk tolerance, and growth objectives. Entrepreneurs should carefully evaluate their options and consider seeking advice from financial professionals or mentors to make informed decisions about funding their small businesses.

Follow the legal requirements

Starting a small business involves navigating various legal requirements to ensure compliance and mitigate potential risks. Here are key legal considerations for launching a small business:

• Business Structure: Choose a legal structure for your business, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Each structure has different implications for taxation, liability, and regulatory requirements, so it's essential to select the one that best suits your needs and objectives.
• Business Name Registration: Select a unique and distinctive name for your business and register it with the appropriate state or local government agency. Conduct a thorough search to ensure that the chosen name is not already in use by another business to avoid potential trademark infringement issues.
• Business Licenses and Permits: Obtain any necessary business licenses, permits, or registrations required to operate legally in your jurisdiction. These may include general business licenses, industry-specific permits, health permits, zoning permits, or professional licenses, depending on the nature of your business and its location.
• Tax Obligations: Understand your tax obligations as a small business owner, including federal, state, and local taxes. Obtain an employer identification number (EIN) from the Internal Revenue Service (IRS) if you plan to hire employees, and familiarize yourself with tax filing deadlines, deductions, and credits applicable to your business.

By addressing these foundational legal requirements, you can establish a solid legal framework for your small business and lay the groundwork for its successful operation. It's essential to stay informed about legal developments and seek professional advice as needed to ensure ongoing compliance with applicable laws and regulations.

Choose your suppliers and vendors

Developing strong supplier relationships is essential for the success of small businesses, whether brick-and-mortar or online. Here's how:

For Brick-and-Mortar Small Businesses:

• Identify Reliable Suppliers: Research and select suppliers offering quality products and competitive pricing.
• Build Personal Relationships: Attend industry events to meet suppliers in person and foster rapport
• Negotiate Favorable Terms: Secure pricing, payment terms, and product quality that benefit both parties.
• Communicate Effectively: Maintain open communication to address issues promptly and provide feedback for improvement.

For Online Small Businesses:

• Research Supplier Options: Explore directories and marketplaces to find reliable suppliers matching your needs.
• Establish Clear Expectations: Communicate requirements clearly to prevent misunderstandings.
• Leverage Technology: Use automation tools for efficient supplier management and order processing.
• Monitor Performance Metrics: Track key metrics like order accuracy and delivery times to ensure quality service.

By following these strategies, small businesses can cultivate effective supplier relationships, contributing to long-term success.

Hire staff

When establishing a brick-and-mortar small business, hiring the right team is crucial for smooth operations and customer satisfaction. Here are essential roles to consider:

• Store Manager: Oversees daily operations, including sales, inventory management, and staff supervision. Responsible for ensuring the store meets revenue targets, customer service standards, and compliance requirements.
• Sales Associates: Assist customers with product inquiries, purchases, and returns. Provide product recommendations, answer questions about merchandise, and ensure a positive shopping experience.
• Cashiers: Process transactions, handle payments, and issue receipts. Maintain accuracy in cash handling procedures, reconcile cash drawers, and adhere to security protocols.
• Visual Merchandiser: Designs and maintains attractive product displays to maximize sales and enhance the overall shopping environment. Arranges merchandise, sets up window displays, and updates signage to highlight promotions or new arrivals.
• Inventory Manager: Manages inventory levels, stock replenishment, and order fulfillment. Conducts regular inventory counts, monitors stock movement, and coordinates with suppliers to ensure adequate product availability.

By hiring a well-rounded team with diverse skill sets and expertise, brick-and-mortar small businesses can effectively meet the needs of their customers, drive sales, and achieve long-term success.

Create your marketing plan

When it comes to marketing strategies, small businesses, whether brick-and-mortar or online, must employ tailored approaches to effectively reach and engage their target audiences.

Brick-and-Mortar Small Business:

• Local Events and Sponsorships: Participate in local community events, such as fairs, festivals, or charity fundraisers, to increase brand visibility and engage with potential customers. Sponsorship opportunities, such as sponsoring a local sports team or cultural event, can also enhance brand recognition and demonstrate support for the community.
• In-Store Promotions and Events: Host in-store promotions, product demonstrations, or exclusive events to attract foot traffic and encourage customer loyalty. Offer discounts, free samples, or special deals to incentivize purchases and create a memorable shopping experience. Utilize signage, window displays, and store decorations to promote seasonal or holiday-themed promotions.
• Local Paid Advertising: Invest in local paid advertising channels, such as targeted Facebook or Instagram ads, Google Ads, or local directories like Yelp, to reach potential customers in your area. Use geo-targeting and demographic filters to ensure your ads are seen by relevant audiences. Monitor ad performance metrics, such as click-through rates and conversion rates, to optimize your advertising strategy and maximize return on investment.

Online Small Business:

• Paid Social Media Advertising: Utilize paid social media advertising platforms, such as Facebook Ads, Instagram Ads, or LinkedIn Ads, to target your ideal audience based on demographics, interests, and behaviors. Create engaging ad creatives, such as carousel ads, video ads, or sponsored posts, to attract attention and drive traffic to your website or online store. Monitor ad performance metrics and adjust targeting parameters and ad content to optimize campaign performance and maximize ROI.
• Paid Search Advertising: Invest in paid search advertising campaigns, such as Google Ads or Bing Ads, to increase visibility for relevant search queries related to your products or services. Use targeted keywords, ad extensions, and ad scheduling to reach potential customers at the right time with the right message. Monitor keyword performance and adjust bidding strategies to improve ad placement and drive qualified traffic to your website.
• Retargeting Campaigns: Implement retargeting campaigns to re-engage website visitors who have previously interacted with your site but did not make a purchase. Use retargeting pixels or cookies to track user behavior and deliver personalized ads across various online platforms, such as social media, display networks, or email. Offer special promotions or incentives to encourage return visits and conversions, and continuously optimize retargeting campaigns based on audience segmentation and performance data.

By leveraging paid acquisition channels tailored to the specific needs and characteristics of brick-and-mortar and online small businesses, entrepreneurs can effectively promote their brand, attract customers, and drive sales growth.

Licenses and Permits Needed to Open a Small Business

Opening a small business requires navigating various legal requirements to ensure your business operates within the law. The specific licenses and permits needed can vary depending on the location and nature of your business, but generally, you will need the following:

1. Business License

A business license is mandatory for legally operating a retail store. This license is obtained from the local city or county government. It authorizes your business to operate within the jurisdiction and ensures compliance with local regulations. The application process typically involves filling out forms with details about your business, such as its name, address, and type of business activities. You may also need to pay an application fee and renew the license annually.

2. Seller’s Permit

A seller’s permit, also known as a sales tax permit, allows you to sell products at the retail level and collect sales tax from customers. This permit is typically issued by the state’s Department of Revenue or Taxation. To obtain a seller’s permit, you need to apply through the state’s tax authority, providing information about your business, including its federal tax ID number (EIN), business structure, and estimated sales. This permit must be displayed prominently in your store and is usually free or requires a nominal fee.

3. Employer Identification Number (EIN)

An EIN, issued by the IRS, is required if you plan to hire employees. It serves as a federal tax identification number and is used for reporting employment taxes, opening business bank accounts, and filing business tax returns. You can apply for an EIN online through the IRS website. The process is straightforward and free of charge. Once obtained, the EIN remains with your business for its entire lifespan.

4. Zoning Permits

Zoning permits ensure your retail store location complies with local zoning laws. These laws regulate land use and determine which types of businesses can operate in specific areas. Before signing a lease or purchasing property, check with the local zoning office to ensure your retail store activities are permitted at the chosen location. You may need to submit a zoning application, site plans, and pay a fee. Approval may involve inspections and public hearings.

5. Certificate of Occupancy

A Certificate of Occupancy (CO) is a document issued by the local government that certifies a building's compliance with building codes and other laws, indicating it is safe for occupancy. This certificate is necessary for any new construction, renovations, or when changing the use of a building. To obtain a CO, you must pass inspections by building, fire, and health departments. This process involves submitting an application, scheduling inspections, and addressing any identified issues before approval.

Why Toast Retail is Perfect for Small Businesses

In today's competitive small business landscape, selecting the right technology is essential for both new ventures and established businesses aiming for success. Solutions like Toast retail not only streamline operations, making them more efficient, but also provide invaluable insights to optimize the financial health of the business. 

By harnessing the power of point of sale technology, retailers can gain a competitive edge, improve customer satisfaction, and drive sustainable growth. Choosing the right technology sets the foundation for long-term success, empowering businesses to adapt to evolving market demands and thrive in an increasingly digital world.

The tech that redefined restaurants is now here to transform retail. Supercharge your store with the POS built for high volumes and complexity, offering everything you need to run your business on one platform. Toast's retail offering is a game-changer for businesses like convenience stores, liquor stores, and retail stores, revolutionizing how they operate and interact with customers. Here's why Toast is the perfect fit for these retail environments.

1. Helps Modernize How You Sell

Toast's intuitive, cloud-based system simplifies daily operations. Its user-friendly interface makes staff training a breeze, ensuring seamless adoption across your team. Whether it's processing payments in-store or integrating with online sales channels, Toast ensures a smooth and consistent experience for your customers regardless of how they shop.

• Intuitive Cloud-Based System: Our intuitive, cloud-based system is easy to learn and easy to use. Say goodbye to complicated interfaces and hello to streamlined processes. Toast is designed to simplify your day-to-day operations, from staff training to consolidated operations, ensuring maximum efficiency and productivity.

• Seamless Payment Processing: Toast’s seamless payment processing easily integrates with online payments for smoother sales every time, no matter how your customers are shopping. This integration ensures a hassle-free experience for both customers and staff, leading to increased satisfaction and faster transactions.

• Flexible Order and Checkout Options: Offer flexible and efficient order and checkout options with reliable hardware including handhelds, kiosks, and guest-facing terminals. Adapt to the diverse needs of your customers and reduce wait times at checkout with Toast's versatile hardware solutions, enhancing the overall shopping experience.

2. Streamline Retail Management

Efficiency is key in retail, and Toast delivers with automated, mobile-first inventory management. Say goodbye to manual inventory tracking and hello to SmartScan, a feature that enables quick product scanning and shelf placement. Managing thousands of SKUs becomes effortless with Toast's intuitive product database and bulk update capabilities.

• Automated, Mobile-First Inventory: Experience the freedom of automated, mobile-first inventory management with Toast. Create and print barcodes in bulk, and take new products from scan to shelf in seconds with our SmartScan feature. Say goodbye to tedious manual inventory tasks and hello to streamlined operations.

• Efficient SKU Management: Easily manage thousands of SKUs with our intuitive product database and bulk updates feature. Modify, reprice, and import multiple products at once, saving valuable time and resources. With Toast, keeping track of your inventory has never been easier.

• Retail-Enhanced Dashboards: Stay on top of your business with retail-specific dashboards and cost-tracking reports. Monitor trends, maximize margins, and ensure your top-selling products are always stocked, empowering you to make data-driven decisions that drive profitability.

3. Tailor Your Customer Experience

Toast empowers you to tailor the customer experience to fit your unique retail concept. Whether you're considering adding food service or expanding your offerings, Toast's flexible platform accommodates creative expansion.

• Creative Expansion Opportunities: Thinking of adding food service to your retail concept? Including Kitchen Display Systems and Order Ready Boards, our flexible platform allows for creative expansion. Explore new revenue streams and enhance the overall customer experience with Toast's versatile features.

• Online Ordering and Delivery Integrations: Give your guests the option to order from home with Toast’s Online Ordering and our third-party delivery integrations. Meet your customers where they are and provide convenience that keeps them coming back, increasing customer loyalty and satisfaction.

• Loyalty Rewards and Personalized Offers: Be your neighborhood's favorite shop (and incentivize repeat visits) with loyalty rewards and personalized offers. Transform one-time shoppers into loyal patrons by engaging with your community and offering enticing rewards, making your store the go-to destination for your customers.

In conclusion, Toast's retail solution is more than just a point of sale system; it's a comprehensive toolkit designed to elevate your retail store to new heights. From modernizing sales processes to streamlining management and enhancing the customer experience, Toast empowers retail businesses to thrive in today's competitive market.

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