The Quick Start Guide to Building a Small & Local Business

Starting a small or local business? Let us guide you to success with our comprehensive, step-by-step guide tailored to help new entrepreneurs take off faster.

Whether starting a brick-and-mortar storefront, an online business, or a combination of both, getting a business off the ground can be challenging. 
Yet, Americans are starting small businesses faster than ever before. In 2021, 5.4 million people applied to start a business—up <a href="https://www.census.gov/econ/bfs/index.html">53% from 2019</a>. According to Axios, &#8220;the small business boom of 2020 comes after one of the least entrepreneurial decades in U.S. history, <a href="https://eig.org/news/its-official-the-2010s-will-go-down-as-a-lost-decade-in-american-entrepreneurship">the 2010s</a>.&#8221;
If you&#8217;re part of this new generation of business owners and small business pioneers, we want to help you get up and running faster and more successfully by providing you with a comprehensive guide on what it takes to get a small or local business off the ground and running. Keep reading to learn:
<ul class="ul1">
<li class="li2">How to create a solid business plan that will set you up for long-term success</li>
<li class="li2">What’s required for legal and tax compliance </li>
<li class="li3">How to finance, manage, and market your business </li>
</ul>
<h1 class="p1">Why start a small and local business?</h1>
The news headlines may be filled with the triumphs of big businesses like Google, Apple, or GE, but the truth is small businesses are the lifeblood of the American economy, driving innovation and competitiveness across all sectors of industry. Currently, small businesses account for about <a href="https://advocacy.sba.gov/2019/01/30/small-businesses-generate-44-percent-of-u-s-economic-activity/">44% of the economic activity</a> in the United States and make up <a href="https://cdn.advocacy.sba.gov/wp-content/uploads/2021/12/06095731/Small-Business-FAQ-Revised-December-2021.pdf">99.9% of all U.S. businesses</a>.
There many reasons to start a small business—some people want to build something from the ground up, others are looking for more flexibility and control, and others &#8220;fall into&#8221; starting their own business after being laid off. No matter what&#8217;s motivating you to start your business, before you dive in, make sure to consider both the risks and the rewards.
Jobs created by small businesses vs. big businesses
<img loading="lazy" decoding="async" class="aligncenter size-large wp-image-25664" src="https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-1024x552.png" alt="how to start a business" width="640" height="345" srcset="https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-1024x552.png 1024w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-300x162.png 300w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-768x414.png 768w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-1536x828.png 1536w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-2048x1104.png 2048w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-600x323.png 600w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-360x194.png 360w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-160x86.png 160w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-350x189.png 350w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-100x54.png 100w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_1-636x343.png 636w" sizes="(max-width: 640px) 100vw, 640px" />
Source: <a href="https://cdn.advocacy.sba.gov/wp-content/uploads/2021/12/06095731/Small-Business-FAQ-Revised-December-2021.pdf">Small Business Association</a>
<h2 class="p1">Benefits of small and local businesses</h2>
While money can be a key motivator for starting a business—and <a href="https://www.guidantfinancial.com/small-business-trends/">65% of small business owners say they are profitable</a>—it is often not the key driver or even the biggest benefit for most small and local business owners. According to one study, <a href="https://www.businessnewsdaily.com/4652-entrepreneur-motivation-benefits.html">more than half of small business owners</a> start their own businesses to be their own bosses. Only 8% of respondents said money was the main motivator.
<img loading="lazy" decoding="async" class="aligncenter wp-image-25665 size-large" src="https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-1024x258.png" alt="how to start a business" width="640" height="161" srcset="https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-1024x258.png 1024w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-300x76.png 300w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-768x194.png 768w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-1536x388.png 1536w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-2048x517.png 2048w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-600x151.png 600w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-360x91.png 360w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-160x40.png 160w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-350x88.png 350w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-100x25.png 100w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_2-720x182.png 720w" sizes="(max-width: 640px) 100vw, 640px" />
Greater flexibility, freedom, and control are often other big motivators for owning a small business. But perhaps the biggest benefit is that most business owners say they are simply happier running their own business, with <a href="https://www.guidantfinancial.com/small-business-trends/">75% saying they are very to somewhat happy</a>.
<h2 class="p1">Challenges and risks to consider</h2>
While owning your own business can be highly rewarding, it&#8217;s not without risk. According to the Small Business Administration, approximately <a href="https://cdn.advocacy.sba.gov/wp-content/uploads/2021/12/06095731/Small-Business-FAQ-Revised-December-2021.pdf">33% of small businesses fail in the first two years</a>, 50% fail within five years, and just 33% make it to 10 years or beyond. A tough economic climate can also make it difficult for small businesses to thrive. For instance, <a href="https://newsroom.bankofamerica.com/content/dam/newsroom/docs/2022/2022%2520Small%2520Business%2520Owner%2520Report%2520ADA.pdf">88% of small business owners</a> say today&#8217;s high inflation is impacting their business.
<img loading="lazy" decoding="async" class="aligncenter size-large wp-image-25676" src="https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-1024x416.png" alt="" width="640" height="260" srcset="https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-1024x416.png 1024w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-300x122.png 300w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-768x312.png 768w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-1536x624.png 1536w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-2048x832.png 2048w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-600x244.png 600w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-360x146.png 360w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-160x65.png 160w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-350x142.png 350w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-100x41.png 100w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_3_1-720x293.png 720w" sizes="(max-width: 640px) 100vw, 640px" />
Other challenges that can impact a business&#8217; survival include not planning effectively, poor marketing, hiring challenges, and financing hurdles. In the following sections, we&#8217;ll look at each of these challenges and offer you guidance on how to avoid these risks so you can set your business up for the greatest success.
<h1 class="p1">Creating a business plan</h1>
A business plan is essential to every business—both large and small. It defines your business objectives and how you will achieve those objectives. A business plan isn&#8217;t only essential to getting funding (every funder will want to see your business plan), it also creates a roadmap for how you will run, manage, and market your business.
According to <a href="https://www.liveplan.com/blog/state-small-business-report/">Liveplan</a>, here’s how most small businesses use a business plan:
<ul class="ul1">
<li class="li2">39% reposition and find new strategies</li>
<li class="li2">36% revisit financials and check the viability</li>
<li class="li2">25% to find customers</li>
<li class="li2">70% to create business</li>
<li class="li1">42% to attract investors</li>
</ul>
<h2 class="p1">Defining your business goals and objectives</h2>
The first step of your business plan is understanding your goals and objectives. These are often split into long-term and short-term goals you hope to achieve. For example, a short-term goal might be to increase your quarterly revenue by 10%, hire three new employees in the next year, or increase the number of customers you have by 20%.
Longer-term goals are more of a vision of where you want to be in five or ten years. These goals will be bigger and take longer to reach. Maybe you want to open five new locations for your business in five years or be doing a million or more in revenue in ten years. Or, maybe your goals are less monetary and more visionary, such as having your business running smoothly enough that you have more freedom and flexibility to spend more time with your family, travel, etc.
Whatever the goals are for your business, once you&#8217;ve defined them, you&#8217;ll want to map out how to achieve them. One way to do this is using the SMART goals strategy:
<ul class="ul1">
<li class="li2">Specific</li>
<li class="li2">Measurable</li>
<li class="li2">Achievable</li>
<li class="li2">Realistic</li>
<li class="li2">Time-bound</li>
</ul>
Following this framework makes it easier to ensure that you have a very clear plan as to what your goals are, how, and when you&#8217;ll achieve them—and because they are realistic, you&#8217;re more likely to succeed.
<h2 class="p1">Identifying your target market</h2>
In order to drive customers to your business, you need to first understand who the best-fit customer is for your business. You can do this by creating a buyer persona for your ideal customer. A well-defined buyer persona typically includes the following information:
<ul class="ul1">
<li class="li3">Demographics: Age, income, education level, and marital status</li>
<li class="li3">Psychographics: Values, lifestyle, hobbies, and morals/beliefs</li>
<li class="li3">Pain points: Problems they have that your business can solve</li>
<li class="li2">Channel preferences: Digital and physical channels to use and interact with your business</li>
</ul>
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<h2 class="p1">Developing a financial plan</h2>
Another part of your business plan needs to focus on how you will finance your business. This is especially important as you are getting started, as you want to have a clear plan for how to support your business in the early stages when you may not have much revenue coming in.
While some businesses are bootstrapped, which means the funding is provided by the owner, for many small and local businesses, there are a lot of upfront costs, such as buying inventory, leasing a business office, and hiring staff that requires additional financing assistance to cover.
Your financial plan should outline what these expenses are, what your projected revenue is for the first year or more, and how you will cover the costs, such as getting a loan from a bank, small business grants, investors, or family and friends.
A solid financial plan allows you to have a realistic understanding of what it will cost to run your business and ensure that you have the means to do so.
<h2 class="p1">Choosing a business structure</h2>
The last part of your business plan is determining what type of business structure you want to use. There are a couple of different ways you can structure your business. Each one has different advantages and can have different impacts on your tax payments and personal liability.
<ul class="ul1">
<li class="li2">Sole proprietorship: This is the simplest business structure as it&#8217;s set up under your personal income on your tax return. Registration is simple or often not even required. However, sole proprietorships put you, your credit, and your personal assets at risk in the case that you default on a loan or get a lawsuit. While sole proprietorship can be convenient when you&#8217;re just getting started, many small business owners move away from this business structure as their business grows.</li>
<li class="li2">Partnership: A general partnership is best described as a sole proprietorship for a business with multiple owners. You avoid double taxation and can easily register your business, but you still assume personal liability.</li>
<li class="li2">Limited liability company (LLC): Creating an LLC will require some paperwork and registering your business. However, you do receive the benefit of protection from personal liability since this type of business structure makes your company an entity that is separate from you. Depending on elections made by the LLC and the number of members, an LLC can be taxed as a corporation, partnership, or as part of the owner&#8217;s tax return.</li>
<li class="li2">S corporation: The most common corporate entity, S corps provides a higher level of personal liability protection than LLCs while still only being taxed once. This structure also allows you to take on more shareholders and investors. It is the most common business structure for small businesses with employees.</li>
</ul>
<img loading="lazy" decoding="async" class="aligncenter size-large wp-image-25668" src="https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-1024x552.png" alt="how to start a business" width="640" height="345" srcset="https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-1024x552.png 1024w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-300x162.png 300w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-768x414.png 768w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-1536x828.png 1536w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-2048x1104.png 2048w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-600x323.png 600w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-360x194.png 360w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-160x86.png 160w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-350x189.png 350w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-100x54.png 100w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_5-636x343.png 636w" sizes="(max-width: 640px) 100vw, 640px" />
<h1 class="p1">Registering your business</h1>
Now that you&#8217;ve got a business plan in place, you&#8217;re ready to get your business registered. Whether your business operates in a retail space or at home, it&#8217;s important to register your business. The main advantage of registering your business is that it can shield you from potential legal and financial liabilities. However, registering can also give you more access to business loans and grants.
You will need to register your business at the federal and state level. Here&#8217;s how:
<ul class="ul1">
<li class="li3">Federal registration: You will need to apply for a federal tax identification number known as an employer identification number (EIN) on <a href="https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online">this IRS page</a> by clicking &#8220;Apply Online Now.&#8221; If you selected sole proprietorship as your business structure, you do not need to register for an EIN. However, if your business is structured as an S corp, you will need to also complete <a href="https://www.irs.gov/forms-pubs/about-form-2553">Form 2553</a> and submit it to the IRS.</li>
<li class="li3">State registration: State registration varies by type of business structure. In some states, business owners, including sole proprietors, must apply for a state tax ID number separate from their federal tax ID number. If you are planning to operate in multiple states—this includes if you will have employees in the state or plan to earn a large amount of revenue in a state—you must register in each of these states and have an eligible registered agent within each one.</li>
<li class="li3">LLC: Owners of LLCs must submit a legal document called the Articles of Organization to register a company. Known as the Articles of Formation in some states, this becomes the official documentation of your company name, office address, registered agent, and even your purpose. It can cost anywhere from $50 to $500 to submit this paperwork, as state fees vary widely. </li>
<li class="li4">S corps: Owners of S corps must submit the Articles of Incorporation, which is similar to the paperwork for LLCs but adds information about who is on your board of directors and how many shares of stock you&#8217;re giving out. This paperwork can cost around $100 to $250.</li>
</ul>
<h2 class="p1">Choosing a business name</h2>
As part of registering your business, you will also need to select a business name. This can match your legal name, such as John Smith, Inc., or it can be an entirely different name, like Perfect Smile Orthodontics. Additionally, you can choose to also register your business name through the U.S. Patent and Trademark Office to give you extra security for your brand.
Additionally, you&#8217;ll want to create a brand image around your business name to gain credibility under that identity. This includes setting up banking transactions with vendors and customers that include your business name. A separate business bank account will also help legitimize your business should IRS question its classification and will help you keep your business and personal finances separate.
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<h2 class="p1">Creating a website and online presence</h2>
With <a href="https://www.thezebra.com/resources/research/small-business-statistics/">70% of consumers</a> learning about a new business online, either through a website or social media, it&#8217;s essential your business have a presence online. Here are some tips on how to make sure your business is easily found online.
<ul class="ul1">
<li class="li3">Choose a domain name: This is the website address for your business. It should closely match your business name and be easy to remember.</li>
<li class="li3">Create your website: You can choose to use a website builder, such as Wix or Square, or outsource this to a web designer. Website builders offer a range of templates and tools that can be used to create a professional-looking website without the need for extensive technical skills. It&#8217;s important to choose a platform that&#8217;s easy to use, customizable and can handle business needs. You can learn more about building a small business website in our comprehensive guide—<a href="https://www.podium.com/guides/website-conversion/">Website 2.0</a>. </li>
<li class="li3">Create content: After your website is created, you can then focus on creating content for the site. This includes creating a homepage, an about page, and product or service pages. It&#8217;s also important to make sure that the website is optimized for search engines so that it can be easily found by potential customers. This can be done by including keywords in the website&#8217;s content, meta tags, and URLs.</li>
<li class="li3">Use local SEO to help your business get found online: Local SEO uses geographically related keyword searches to help connect local businesses with customers who are looking for products or services your business offers in their local area. With <a href="https://www.socialmediatoday.com/news/12-local-seo-stats-every-business-owner-and-marketer-should-know-in-2019-i/549079/">46% of all searches focused on local information</a>, it’s important to create and optimize your Google My Business profile and your website for mobile so that your business can easily be found in local searches.</li>
<li class="li3">Establish an online presence through social media: <a href="https://www.podium.com/guides/social-media/">Social media</a> is an excellent way to engage with customers, build brand loyalty, and drive traffic to the website. This can include creating a business page on Facebook, Twitter, Instagram, or LinkedIn and regularly sharing updates, promotions, and other content. Determine which social media channels are preferred by your target audience for the greatest success.</li>
<li class="li2">Build your online reputation through reviews: Online reviews can help to build trust and credibility with potential customers. Encourage customers to leave reviews on sites like <a href="https://www.podium.com/guides/google-reviews-101/">Google</a>, <a href="https://www.podium.com/article/optimize-yelp-listing/">Yelp</a>, or <a href="https://www.podium.com/article/facebook-for-small-businesses/">Facebook</a>. This can be done by providing excellent customer service and making it easy for customers to leave reviews, such as by texting them a link to leave a review.</li>
</ul>
<img loading="lazy" decoding="async" class="aligncenter size-large wp-image-25674" src="https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-1024x752.png" alt="how to build a business" width="640" height="470" srcset="https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-1024x752.png 1024w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-300x220.png 300w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-768x564.png 768w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-1536x1127.png 1536w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-2048x1503.png 2048w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-600x440.png 600w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-360x264.png 360w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-160x117.png 160w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-350x257.png 350w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-100x73.png 100w, https://cms.podium.com/wp-content/uploads/2023/01/Inline_11-467x343.png 467w" sizes="(max-width: 640px) 100vw, 640px" />
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<h2 class="p1">Networking and building partnerships</h2>
Networking and partnerships can be powerful tools for small business marketing. In fact, <a href="https://financesonline.com/business-networking-statistics/">95% of professionals</a> think face-to-face communication is vital for long-term business. However, networking can be done in person or online. Trade shows are one way you can network your business. In fact, businesses say about <a href="https://financesonline.com/business-networking-statistics/">5-20% of customers</a> are found through tradeshows.
Social media platforms like LinkedIn can also be a valuable networking tool for small business marketing. According to one study, <a href="https://news.linkedin.com/2017/6/eighty-percent-of-professionals-consider-networking-important-to-career-success">35% of respondents</a> said that a casual conversation on LinkedIn has led to a new business opportunity.
Business partnerships are another way to market your company and can be especially valuable for small businesses because they can help you develop alliances that can allow you to compete better with big businesses. One of the most common partnerships can be with your vendors or suppliers. Not only do you already have a relationship with these businesses, but you often have aligned interests. An example of a strategic partnership might be if you&#8217;re a plumber and you partner with a plumbing supply vendor. You buy your parts from them, which increases their sales, while they refer customers to your business, increasing your sales.
<h2 class="p1">Advertising and public relations</h2>
Advertising and public relations are two important strategies that small businesses can use to market their products or services. Both strategies can help to build brand awareness, increase visibility, and drive sales, but they are different in terms of their approach and execution.
<a href="https://www.podium.com/article/free-advertising-sites/">Advertising</a> is a paid form of promotion, which can include television, radio, print, and online ads. Advertising can be an effective way to reach a large audience quickly, and it allows small businesses to target specific demographics or geographic areas. But advertising can get expensive quickly, so it&#8217;s important to carefully plan and budget your advertising efforts and to ensure that the ads are placed in the most appropriate and effective media outlets.
Public relations (PR), on the other hand, is a form of earned media in which your business leverages relationships with journalists and influencers to gain coverage in the press. Public relations can be an effective way to build credibility and trust with potential customers. In fact, it&#8217;s better at building trust and credibility than advertising. According to one study, PR can be <a href="https://www.forbes.com/sites/theyec/2020/10/21/the-ultimate-debate-pr-versus-advertising/?sh=633d74a71668">90% more effective than advertising</a>. It can also be a cost-effective way to reach a large audience.
Despite PR&#8217;s effectiveness, it can be harder to generate good PR consistently, so a balanced approach between PR and advertising is often a good strategy.
<h1 class="p1">Tips for success as a small business owner</h1>
Starting and running your own business does take a lot of effort, but the rewards often outweigh both the work involved and the risks. If you follow the tips in this guide, you&#8217;ll be well on your way to success. Remember to:
<ul class="ul1">
<li class="li3">Create a detailed business plan</li>
<li class="li3">Determine your target audience</li>
<li class="li3">Develop a sales and marketing strategy</li>
<li class="li3">Plan out how to finance your business</li>
<li class="li3">Hire and retain employees effectively</li>
<li class="li2">Follow all the legal requirements for starting and running a business</li>
</ul>
With all of these actions taken, your business has a strong foundation on which to grow and succeed.
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